Public Finance (The McGraw-Hill Series in Economics)
10th Edition
ISBN: 9780078021688
Author: Harvey S Rosen, Ted Gayer
Publisher: McGraw-Hill Education
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Northeastern costs approximately $50,000 per year for a four-year program, whether completed in four years or five. Assume that a student’s parents realized 15 years ago that college was going to cost $50,000 per year for four years and wondered how much they would have to save each year to have the money to pay for the student’s education. The assumption is that payments are made into the college fund each year, and payments are withdrawn from the fund at the end of the relevant years.The key information for this scenario is as follows:
The number of years of contributions is 18.
The college payments will be made in years 15, 16, 17, and 18.
The interest rate is 10 percent.
College costs are $50,000 per year and are the same for each of the four years.
Using the key information for the scenario above, how much would the parents have to save each year for 18 years to have exactly the amount of money needed to pay the student’s expenses?…
A dairy owner is deciding whether or not to invest in new milk machines. The cost of the machines is $100,000. If she purchases the machines, the dairy will earn $30,000 in the first year, $50,000 in the second year, and $60,000 in year 3. What is the NPV of the investment? (Rounded to the nearest whole dollar)
Katherine D’Ann is planning to finance her college education by selling programs at the football games for State University. There is a fixed cost of $400 for printing these programs, and the variable cost is $3 each program. There is also a $1,000 fixed fee that is paid to the University for the right to sell these programs. If Katherine is able to sell each program for $5, how many would she have to sell in order to break even?
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Public Finance (The McGraw-Hill Series in Economics)
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