Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Value of a single amount versus a mixed stream Personal finance problem Gina Vitale has just contracted to sell a small parcel of land that

image text in transcribed
Value of a single amount versus a mixed stream Personal finance problem Gina Vitale has just contracted to sell a small parcel of land that she inherited a few years ago. The buyer is willing to pay $22,951 now, or the buyer will make a series of payments starting now and continuing at annual intervals shown in the following table. Because Gina doesn't really need the money today, she plans to let it accumulate in an account that earns 5% annual interest. Given her desire to buy a house five years after selling the lot, she decides to choose the payment alternative either the lump sum or the mixed stream that provides the higher future value at the end of 5 years. Which alternative will she choose? The future value, FV, of the lump sum deposit is 5 (Round to the nearest cent) The future value of the mixed stream of payments is $ (Round to the nearest cent) Which alternative will Gina choose? (Select the best answer below) O O Mixed stream of payments Lump sum deposit Data Table (Click on the icon here into a spreadsheet) in order to copy the contents of the data table below Mixed Stream Beginning of year Cash Flow $4,000 $5,000 $9,000 $6.000 $5,000 Print Done

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance And Public Policy

Authors: Jonathan Gruber

7th Edition

1319281109, 9781319281106

More Books

Students also viewed these Finance questions

Question

What are the three structures of OS in distributed system.

Answered: 1 week ago

Question

Have you ever told a lie that you regretted?

Answered: 1 week ago

Question

Differentiate 3sin(9x+2x)

Answered: 1 week ago

Question

Compute the derivative f(x)=(x-a)(x-b)

Answered: 1 week ago