Future

value.

A speculator has purchased land along the southern Oregon coast. He has taken a loan with the end-of-year payments of

$7,000

for

9

years. The loan rate is

8%.

At the end of

9

years, he believes that he can sell the land for

$90,000.

If he is correct on the future price, did he make a wise investment?

Question content area bottom

Part 1

What is the future value of the loan

9

years from now?

$enter your response here

(Round to the nearest cent.)

Part 2

If he is right on the future price, did he make a wise investment?(Select the best response.)

A.Yes. He will make a profit because the value of the land is less than the future value of the loan.

Yes. He will make a profit because the value of the land is less than the future value of the loan.

B.No. He will encounter a loss because the value of the land is greater than the future value of the loan.

No. He will encounter a loss because the value of the land is greater than the future value of the loan.

C.No. He will encounter a loss because the value of the land is less than the future value of the loan.

No. He will encounter a loss because the value of the land is less than the future value of the loan.

D.Yes. He will make a profit because the value of the land is greater than the future value of the loan.

Yes. He will make a profit because the value of the land is greater than the future value of the loan.