A Swimming Pool with Dimensions 8 M Wide by 14 $2.6 \mathrm {~m}$

question 20

Essay

A swimming pool with dimensions 8 m wide by 14 m long with an average depth of $2.6 \mathrm {~m}$ is filled from a lake at a level of $50 \mathrm {~m}$ below the pool using an electric pump with an efficiency of $85 \%$ . How much does the electricity used to fill the pool cost at a rate of $\$ 0.11$ per $\mathrm { kWh }$ ?

Apply the concept of continuous compounding to calculate future values.

Evaluate investment opportunities using present value and future value concepts.

Understand and calculate the effective annual rate (EAR) for mortgages and loans.

Understand the concept of time value of money and its applications.

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Definitions:

Expected Rate

The anticipated yield or return on an investment during a specific period, often estimated based on historical data and future projections.

Market Segmentation Theory

A theory suggesting that the bond market is segmented on the basis of maturity and that the interest rates for each segment are determined by the supply and demand for debt within that segment.

Yield Curve

The yield curve is a graph showing the relationship between interest rates (or yields) of bonds having different maturities but the same credit quality, typically illustrating the term structure of interest rates.

Debt Market

A market where debt instruments, including bonds, notes, and bills, are issued and traded, providing entities a way to raise capital through borrowing.