Friend wants you to buy a parcel of land with expected value to increase to $80,000 in the next 5 years. Your other investments yield 5% and you believe the land will increase in value to $80,000. What's the maximum you should offer and be competive with your other investments. A. Cash Diagram B. C. D. Calculation Factor Notation Excel

Friend wants you to buy a parcel of land with expected value to increase to $80,000 in the next 5 years. Your other investments yield 5% and you believe the land will increase in value to $80,000. What's the maximum you should offer and be competive with your other investments. A. Cash Diagram B. C. D. Calculation Factor Notation Excel

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 5SCQ: Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is...

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Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is this fear true? Does a high risk mean the return must be low?
The direct cost of a training module to be taken by an employee is $5000 and the opportunity cost involved is $7000. The expected incremental earnings to be received by the employee in the first 5 years are $3000, $3500, $4000, $4500 and $5000, respectively. Assuming the interest rate is 10%. Based on the concept of net present value, should the employee pursue this training module? Show all steps of calculations.
An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 7% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent.
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Problem 2 Suppose you purchased a house and took a 30 -year mortgage. The mortgage is unusual: you pay yearly, not monthly. The yearly payment is$17,000and the interest rate is4.2%. What is the amount of mortgage you took? (Round to two decimals.) Hint: find the PV of all the payments.
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a) Suppose you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent. What is the future value of the $350 after 4 years? b) Suppose you are deciding whether to buy a particular bond from your local municipality. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. Assume the interest rateis6percent. Underwhatcircumstanceswillyoubuythebond?Meaninguptowhatpriceareyou willing to pay.
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Define the following: i) Simple interest. ii) Breakeven point. iii) Ordinary annuity. b) When the price of a commodity is Sh. 530 the unit demand is 55 units. The demand is 120 units when the price is Sh. 270. If the cost of production is C = 2q + 150, Calculate the profit when 5 units are produced and sold. c) The present value of an annuity due is Sh. 284,000 after 4 years at a discount rate of 10%. Calculate the annual payment. d) A man deposits Sh. 12,000 in a bank at the beginning of each year. The compound interest is 12% per year. Calculate how long it will take for an accumulated amount of Sh. 95,000.