Answered step by step
Verified Expert Solution
Question
1 Approved Answer
4. At what annual rate would the following have to be invested? a) $500 to grow to $1,948 in 12 years b) $300 to grow
4. At what annual rate would the following have to be invested? a) $500 to grow to $1,948 in 12 years b) $300 to grow to $422.10 in 7 years c) $50 to grow to $280.20 in 20 years d) $200 to grow to $497.60 in 5 years 6. How many years will the following take? a) $500 to grow to $1,039.50 at 5% compounded annually b) $35 to grow to $53.87 at 9% compounded annually c) $100 to grow to $298.60 at 20% compounded annually d) $53 to grow to $78.76 at 2% compounded annually 7. You are considering hiring a contractor to build a house. The contractor will be paid $50,000 immediately, $100,000 halfway through the construction, one year from now and $200,000 upon completion of the house 2 years from now. a) What is the present value of your payments to the contractor if your discount rate is 5%? b) You are considering hiring a competing contractor who will charge you $30,000 immediately and $320,000 upon completion in 2 years. If you choose your contractor solely on the basis of pricing, which of the two contractors should you choose? Why
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started