The time value of money concept can be applied in various situations and is a fundamental concept underlying other financial concepts. Consider the following example of the application of this concept. Shen is a divorce attorney who practices law in Houston. He wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $650 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $7,000 and never have to pay annual membership dues. Obviously, the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it's a great deal. Suppose that the appropriate annual interest rate is 5.9%. What is the minimum number of years that Shen must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $650 in annual membership dues? (Note: Round your answer up to the nearest year.) 13 years 14 years 16 years 21 years In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historians estimate that the price he paid for the island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island would be sold for $24, but you need to consider the future Value (FV) of that price in more current times. If the $24 purchase price could have been invested at a 4.75% annual interest rate, what is its value as of 2017 (391 years later)? Obviously, the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it's a great deal. Suppose that the appropriate annual interest rate is 5.9%. What is the minimum number of years that Shen must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value basis) than paying $650 in annual membership dues? (Note: Round your answer up to the nearest year.) 13 years 14 years 16 years 21 years in 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historans estimate that the price he paid for the island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island would be sold for $24, but you need to consider the future value (FV) of that price in more current times. If the $24 purchase pnce could have been invested at a 4.75% annual interest rate, what is its value as of 2017 (391 years later)? $1,548,305,077.50 $1,821,535,385.29 $2,094,765,693.06 $2,404,426,708.58 Grade It Now Save & Continue In completing an amortization schedule, the payments are in amount. The interest payments are calculated as a constant percentage of the loan's outstanding balance. The amount applied to the repayment of principal is! over the life of the loan. Your dream is about to come true! You are about to buy your first classic sports car. To do so, you have arranged to borrow $65,000 from your local credit union. The interest rate on the loan is 6.00%. To simplify the calculations, assume that you will repay your loan over the next four years by making annual payments at the end of each year. According to the loan officer at the credit union, you must answer the following questions before you can go pick up your new car. How much is the annual payment on your new car loan? How much of your Year 2 payment will constitute interest on your loan? How much of your Year 3 payment will be used to repay principal on the loan? How much will you pay in total interest to finance the purchase of your $65,000 car? Grade It Now Save & Continue Continue without saving