Pigou buys a house for $500,000, rents it for $2,000 per month for four years, and then sells it for $600,000. What is Pigou's per-year rate of return? Multiple Choice 4.8 percent 9.8 percent 20 percent 39.2 percent

Pigou buys a house for $500,000, rents it for $2,000 per month for four years, and then sells it for $600,000. What is Pigou's per-year rate of return? Multiple Choice 4.8 percent 9.8 percent 20 percent 39.2 percent

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

See similar textbooks

Related questions

Q: A mechanical contractor is trying to calculate the present worth of personnel salaries over the next…

A: Given information: Salary at the end of year = $150000 Raise per year = 5% Interest rate = 12%

Q: What does the profitability index measure?

A: Profitability index shows the relationship between the costs and benefits of the proposed project.…

Q: What are the more complex applications of rate-of-return techniques?

A: Rate of return is a certain percentage of income from an investment. The rate of return is…

Q: A young engineer is considering to built a 25unit apartment near a commercial center. Because of the…

A: A rate of return (RoR) is the net profit or loss of an investment throughout a predetermined…

Q: You have $10,000 available for investment in stock. You are looking for agrowth stock that can grow…

Q: The present value of a fixed-payment loan is calculated as the all cash flow payments. of the…

A: In the market, people make an investment decision based on various parameters such that risk,…

Q: The recovery of an amount of capital P committed to an asset, plus the time value of the capital at…

A: True

Q: How long does it take to become a millionaire? A $500,000 investment will hit $1 million in 42 years…

Q: Economics Cheng Lai can obtain a rate of return on his savings that will enable him to reach his…

Q: Use the Rule of 72 to approximate how many years it will take money to double when growing at an…

A: Rule of 72 helps us to calculate the number of years it will take the money to double given the…

Q: You are thinking of investing $3600 this year. You have received advice from family members. • Aunt…

A: Money is a commodity accepted by general consent as a medium of economic exchange. Here, we…

Q: When interest is calculated only on the principal amount of the investment, it is known as…

A: Mainly, there are two types of interest rates, simple interest and compound interest.

Q: You purchased a piece of property at $450,000 six years ago. You can sell theproperty at $650,000.…

A: The annual rate of return can be calculated by using the formula given below:

Q: Using 12 percent simple interest per year, how much interest will be owed on a loan of $500 at the…

Q: Suppose Crystal Wilson wants to accumulate $1,000,000 by the time she retires in 40 years. If she…

A: Given, FV = $1,000,000 Time = 40 years Rate of interest = 10%

Q: What is the process of Calculating the Return on Invested Capitalfor Mixed Investments?

A: Investment: The term investment refers to the employment of funds with the motive of getting…

Q: Tom has the opportunity to purchase an investment that will pa $30,000 in 5 years. The purchase…

A: here we can calculate the present value and know the is tom purchase or not which are as follow-

Q: You have been working as a manager of fashion store. During your work you have saved $50,000. You…

A: Explicit cost = utility + salary of clerk + material = 8000 + 20000 + 50000 = 78000 implicit cost =…

Q: Titli has been going through a real rough patch in her life. She has been constantly bullied at her…

A: In a market, individuals can make their choices on their individual behavior as they have various…

Q: Is it always possible for the cash borrowed (released) from a project tobe reinvested to yield a…

A: Rate of return is a certain percentage of income from an investment.

Q: You agree to lend ________ to a friend for a year at an annual interest rate of 10%. At the end of…

A: The lending amount is RM6000.

Q: Betty will need $12,000 in five years to pay for a major overhaul on her tractor engine. She has…

A: Given F (Future Sum of Money) – $12000 i (Effective Interest Rate) – 5% N (Number of Interest…

Q: For a typical demand curve for apples, the horizontal axis shows the amount of apples consumers…

A: Answer -

Q: Describe the method for determining the length of time required to recover the cost of investment?

A: The cost of an investment includes charges for the purchase such as commissions, sales, and duties.…

Q: l borrowed P30,444 on Dec. 10, 2001 to be repaid on Nov. 23, 2003. Find the amount to be repaid at…

A: Amount Borrowed = P30,444 Time period = Dec. 10, 2001 to Nov 23, 2003

Q: How can the Calculation of Return on Invested Capital for Mixed Investments be done?

A: Return on invested capital allows us to measure the efficiency of a firm or company at allocated…

Q: Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,…

A: The difference between the economic cost and the accounting cost is that economic cost also includes…

Q: Explain Incremental-Investment Analysis?

A: Incremental Investment analysis is a method used in business decision making to assess the true…

Q: You have two investments to choose from. Investment A pays an interest rate of 5% for 2 years and…

A: Future worth is a worth of a venture or resource on a particular date from now on. To put it another…

Q: David is a detective in the Atlanta Police Department earning $75,000 per year. He is also an avid…

A: David is a detective with a flair for cooking. He has to decide whether he can quit his present job…

Q: What amount of money invested today at 15% interest can provide the following scholarships: ₱30,000…

A: The interest charged on a loan or deposit is known as compound interest. It is the most often…

Q: f you pay $1000 for a $1000 bond that pays annual “coupon interest” equal to 5% and matures in 3…

A: Given bond coupon rate = 5 % Bond face value = 1000 $ Current market value = 1000 $ Time = 3 years

Q: Explain Present-Worth Analysis?

A: Present worth analysis is an equivalence technique of analysis in which cash flow of a project are…

Q: The present value of a fixed-payment loan is calculated as the of the present value of all cash flow…

A: Meaning of Financial Assets: The term financial assets refer to the situation, under which these…

Q: Interest is money paid for the use of equity capital. Select one: O True False

A: The equity capital would result in the amount of funds that the investor would put into business in…

Q: If an effective rate of interest is given 6%, compute for the interest rate if it pays thrice a…

A: Answer :- Given data Effective rate of interest 6% And Interest pays quartly.

Q: Describe the Decision Rule for Simple Investments?

A: In a simple investment, cash flows change sign only one time. For example, negative cash flow in the…

Q: Tell about the related diversification

A: A most prominent differentiation among the various forms of diversification is related…

Q: The payback period with interest is the length of time required to recover the first cost of an…

A: False Payback period is defined as the number of years it would take in recovering the funds with…

Q: Shawna bought an antique table for $200 last year and is now selling it for $250. Her rate of return…

A: Given Details - Buying price = 200 Selling price = 250

Q: Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,…

A: Given: Golda gave up a salary = $40,000 per year Invested her savings = $30,000 The savings were…

Q: What is (a) the highest, and (b) lowest rate of return (in percent) possible?

A: (a) The possible highest rate of return is infinitive. The reason is that a firm can earn more and…

Q: A 5-year ordinary annuity has periodic cash flows of $100 each year. If the interest rate is 8…

A: In economics, present value refers to the current value of a future stream of cash flows. Future…

Q: What refers to the ratio of the interest payment to the principal for a given unit of time and…

A: For the production and consumption of goods, economic agents have derived a barter system. In the…

Q: Betty will need $12,000 in five years to pay for a major overhaul on her tractor engine. She has…

A: Investment can be calculated by using the following formula.

Q: A bond that is currently selling at $1,000 offers to pay $50 annually. What is the percentage rate…

A: Given information - Bond price = $1000 Return = $50

Q: How long does it take for your money to double if you can earn 7% on your investment? Triple?…

A: The doubling time , given by rule of 72, tells us about the number of years' time needed for an…

Question

Pigou buys a house for $500,000, rents it for $2,000 per month for four years, and then sells it for $600,000. What is Pigou's per-year rate of return?

Multiple Choice

4.8 percent
9.8 percent
20 percent
39.2 percent

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Shawna bought an antique table for $200 last year and is now selling it for $250. Her rate of return on the table is Multiple Choice 10 percent. 20 percent. 25 percent. 30 percent.
A 6 times-interest-earned ratio is considered acceptable. Question 11 options: 1) True 2) False
Using 12 percent simple interest per year, how much interest will be owed on a loan of $500 at the end of two years?
What is (a) the highest, and (b) lowest rate of return (in percent) possible?
Can someone provide the right answer for part (c) I have posted this question dozens of times and I was given different answer everytime. one time i get t = 90 months and other time t = 66 months and other time I get t = 100 months. Can someone help me?
Consider a training program that will result in a worker receiving a one time bonus of $2,900 two years from now. The cost of the training program is $2,000. What is the rate of return on this investment?
You purchased a piece of property at $450,000 six years ago. You can sell theproperty at $650,000. What is the rate of return on this real estate investment?
What is the definition of internal rate of return (IRR)? If you expect the annual interest rates are much different in the next 10 years, would the IRR be the ideal measure? Why or why not?
True/False Increase in total product always indicates that there are increasing returns to a factor.
How much should they save annually for the next three years if they want to build up Joseph's college fund to $31,000, assuming a 5 percent rate of return and ignoring taxes on the interest?
John invests 10000 of his savings into opening up a new coffee roasting company over the course of a year the new coffee roasting company earns him a 6% return on his investment if John had not invested his money in the coffee roasting company he could have earned a 5% return by investing the 10000 in the stock market instead thus he did 1% better in the coffee roasting company than he could have done on his alternative investment which kind of cost does this alternative investment represent opportunity cost average total cost fixed cost variable cost
Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent. During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc. If Jamie decides to embark on her new venture, Accounting costs: Economic costs: Opportunity costs: