1. As rental tor a building, the owner received two offers: Option A: Php50,000 a year for 8 years, the rental for each year being paid at the start of each year; Option B: Php30,000 the first year, Php40,000 the second year, Php50,000 the third year, and Php60,000 for the next 5 years with all rentals paid at the beginning of each year. Money is worth 12%. a) What is the present worth of Option A? b) What is the present worth of Option B? c) Which offer is better?

1. As rental tor a building, the owner received two offers: Option A: Php50,000 a year for 8 years, the rental for each year being paid at the start of each year; Option B: Php30,000 the first year, Php40,000 the second year, Php50,000 the third year, and Php60,000 for the next 5 years with all rentals paid at the beginning of each year. Money is worth 12%. a) What is the present worth of Option A? b) What is the present worth of Option B? c) Which offer is better?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A seasonal bus tour firm has 5 buses with a capacity of 60 people each. Each customer pays $25 for a one-day tour. Records show $360,000 in fixed costs per season, incremental costs of $5 per customer, and an average daily occupancy of 80%. The number of days of operation necessary each season to break even is closest to which value? (a) 50 days (b) 75 days (c) 100 days (d) 120 days?
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Problem Attached
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