ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Suppose that you are considering subscribing to “ABC” magazine. The magazine is advertising a one-year subscription for $60 or a three-year subscription for $166. You plan to keep getting the magazine for at least three years. The advertisement says that a three-year subscription saves you $14 compared to buying three successive one-year subscriptions. If the interest rate is 10%, should you subscribe for one year or for three years? (Assume that one year from now a one-year subscription will still be $60.)arrow_forwardCompounding: the accumulation of a sum of money when the interest earned on the sum earns additional interest. Because of compounding, small differences in interest rates lead to big differences over time. Assume that instead of spending $30,000 on your wedding, you only spend $5,000. You use the remaining $25,000 to buy stocks/bonds and you hold them for 40 years. Calculate the Future Value on $25,000: If your portfolio's rate of return is 8% (i = 0.08), Future Value = If your portfolio's rate of return is 6% (i = 0.06), Future Value = In a 200-word paragraph, please summarize the results of your calculations and list three things that you learned from this exercise.arrow_forwardSabrine purchased 4,500 shares of a mutual fund at an offer price of $8.88 per share. Later, she sold the investment for $7.38 per share. During the time she owned the shares, the fund paid a dividend of $0.52 per share. What was her return on her investment? (Round to the nearest tenth.)arrow_forward
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