1. Shelley is deciding whether to start a winery. To do this, she must leave her job as a consultant from which she could earn $120,000 as a full-time employee, and instead take a part-time job as a gardener that pays $30,000. It costs her $110,000 to install watering equipment and vines. She pays for one-half of this amount from her savings, and borrows one-half. There is a 10% rate of interest. If she was to cease her business, then the watering equipment and vines would have no resale value. As well, she must pay $25,000 per year for water. At the time Shelley is deciding whether to start the business she plans to operate it for one year and then cease the business. Her opportunity cost of operating the business for that year is: a) $236,000 b) $225,000 c) $245,000 d) $278,000 e) Zero

1. Shelley is deciding whether to start a winery. To do this, she must leave her job as a consultant from which she could earn $120,000 as a full-time employee, and instead take a part-time job as a gardener that pays $30,000. It costs her $110,000 to install watering equipment and vines. She pays for one-half of this amount from her savings, and borrows one-half. There is a 10% rate of interest. If she was to cease her business, then the watering equipment and vines would have no resale value. As well, she must pay $25,000 per year for water. At the time Shelley is deciding whether to start the business she plans to operate it for one year and then cease the business. Her opportunity cost of operating the business for that year is: a) $236,000 b) $225,000 c) $245,000 d) $278,000 e) Zero

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

I need typed answer please
Subject :- Economy
Yogajothi is thinking of investing in a rental house. The total cost to purchase the house, including legal fees and taxes, is $240,000. All but $30,000 of this amount will be mortgaged. He will pay $1700 per month in mortgage payments. At the end of two years, he will sell the house and at that time expects to clear $50,000 after paying off the remaining mortgage principal (in other words, he will pay off all his debts for the house and still have $50,000 left). Rents will earn him $2500 per month for the first year and $2900 per month for the second year. The house is in fairly good condition now, so he doesn't expect to have any maintenance costs for the first six months. For the seventh month, Yogajothi has budgeted $500. This figure will be increased by $50 per month thereafter (e.g., the expected month 7 expense will be $500, month 8, $550, month 9, $600, etc.). If interest is 6 percent compounded monthly, what is the present worth of this investment? Given that Yogajothi's…
Help please
1. You purchased a bond for $925. The bond has a face value of $1,000 and it pays a dividend once a year. You sold the bond for $850 after 3 years well before the bond reaches maturity. You find that in this investment you made a 4% rate of return. a) What is the amount of dividend that the bond paid you every year? b) What is the interest rate the bond is paying?
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
1. math of interest. please solve correctly
Suppose you wish to borrow $800 for four weeks and the amount of interest you must pay is $20 per $100 borrowed. What is the arp at which you are borrowing money
6. You may borrow or lend at a 5% interest rate, which you expect to remain stable forever. Make a choice and explain your answer in each scenario below. a. You may receive a gift of $500 today or a gift of $540 next year. b. You may receive gift of $100 today or a four-year loan of $500 without interest. c. You may receive a $350 rebate on an $8000 car or one year of no-interest financing on the full price of the car. d. You have just won $1 million in the lottery. You may receive $500,000 now or the full million, paid out in 20 annual payments of $50,000. e. Alternatively, you may take $500,000 now or receive $25,000 per year for eternity (a contract that your heirs will inherit).