The construction of a house now, to cost 500,000. b. The construction of a smaller house now, to cost 250,000 and at the end of 3 years, an extension to be added to cost 350,000. Which of the two options is more economical if the interest rate is 20% compounded annually and depreciation not to be considered?
The construction of a house now, to cost 500,000. b. The construction of a smaller house now, to cost 250,000 and at the end of 3 years, an extension to be added to cost 350,000. Which of the two options is more economical if the interest rate is 20% compounded annually and depreciation not to be considered?
Chapter16: Real Estate And High-risk Investments
Section: Chapter Questions
Problem 2FPC
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Question
A newlywed couple is planning to build a house of their own. They are
considering two options:
a. The construction of a house now, to cost 500,000.
b. The construction of a smaller house now, to cost 250,000 and at the end of 3
years, an extension to be added to cost 350,000.
Which of the two options is more economical if the interest rate is 20%
compounded annually and
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