June has a small house, on a small street, in a small town. If shesells the house now, she will likely get $110, 000 for it. If shewaits one year, she will probably receive more- say, $120,000. Ifshe sells the house now, she can invest the money in a 1-yearguaranteed growth bond that pays 8% annual interest,compounded monthly. What are the 2 options worth, and whichshould she choose?

From given information, if house is sold now, she will get $110,000 and invest in 1-year bond with…

Answered: June has a small house, on a small…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

You have just won a lottery prize of $2,500,000 collectible in 10 yearly installments of $250,000 starting today. The total present worth of the prize is $1,663,173. Suppose that you have a large mortgage you want to pay off now. You propose an alternative but equivalent payment scheme. You would like $290,000 today and the balance of the prize in eight years when you intend to purchase a large piece of waterfront property. How much will the payment be in eight years? Assume that annual interest is 10 percent compounded monthly
A bond pays $1000 in 5 years an earns an annual interest rate of 2.75%. What is the bond's price? Assume annual compounding. Round your answer to two decimal places.
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How much money will be in a bank account at the end of 15 years if $100 is deposited to day and the interest rate is 8 percent compounded annually?
How much is accumulated over two years in each of the following savings plans? a.$40at the end of each month for 24 months at 12 percent compounded monthly b. $30 at the end of the first month, $31 the end of the second month, and so forth, increasing by$1per month, at 12 percent compounded monthly
You have really gone above and beyond in spending on your fraternity initiation party and ran up $11, 000 on your parent's credit card. You apologize to them and promise to pay $350 per month towards paying off the balance fully. You know that the credit card interest rate is 24%. How long will it take you to fully pay off your good times? a. A bit over 4 years b. About 2 and a half years c. About 3 years d. It depends
3. You just inherited P1,000,000. While you plan to squander some of it away, how much should you deposit in an account earning 5% interest per year if you would like to have P1,000,000 in the account in 10 years?
What's More Activity 2.1 Read each statement and answer the question that follows. 1. If P = P85,500, and r = 1.25% compounded monthly for 1 year, find the compound interest. What is the first component that should be computed? What formula will be used? How much is the maturity value?. How will you find the simple interest?. How much is the simple interest? 2. If F = P50,000 with the rate 1.5% compounded quarterly for 5 years find the present value and compound interest Which should be find first present value or compound interest? How are you going to express the rate in decimal?. What formula will you use in finding the present value? How much is the present value? How will you find the compound interest? How much is the compound interest?
How can growth and development affect the country’s economy?
How much money will be in a bank account at the end of 15 years if $100 is deposited today and the interest rate is 8 percent compounded annually?
6. An individual makes six annual deposits of $2,000 in a savings account that pays interest at a rate of 4% compounded annually. Two years after making the last deposit, the interest rate changes to 7% compounded annually. Ten years after the last deposit the accumulated money is withdrawn from the account. How much is withdrawn?
If you place $50 in a savings account with an interest rate of 7% compounded weekly, what will the investment be worth at the end of five years (round to the nearest dollar)? Select one: a. $71 b. $70 10 C. $79 d. $57

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