Question
#28 A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To be a part owner, the graduate must pay
#28 A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To be a part owner, the graduate must pay $1,849.00 at the end of each year for the next 20.00 years. If the graduates discount rate is 7.00%, what is the cost of this opportunity in todays dollars? In other words, what is the most the graduate should be willing to pay today instead of making payments?
29.
A carpenter sets aside $245,300.00 today to renovate a house in a historic neighborhood. If the housing market is good, he expects to sell the house for $387,950.00 in 4.00 years. However, if the housing market is bad, he will only be able to sell the house for 263,150.00.
What interest rate (or return on his investment) will the carpenter earn if the housing market is good?
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