2. Calculate the present value to purchase a lot of land if $18,000 is put down and $2,000 is paid per quarter for 5 years. Assume that there is 6% interest that is compounded quarterly if the cash price for the land is $25, 000, is it better to pay cash or finance the purchase? According to the Present Value of an Annuity Table, at 1.5% interest for 5 years, the factor is 17.16864. O $52, 337.28; it is better to pay $25,000 cash $4, 782.64 it is better to finance the purchase $27,565.28; it is better to pay $25,000 cash $22,782.64; it is better to finance the purchase
2. Calculate the present value to purchase a lot of land if $18,000 is put down and $2,000 is paid per quarter for 5 years. Assume that there is 6% interest that is compounded quarterly if the cash price for the land is $25, 000, is it better to pay cash or finance the purchase? According to the Present Value of an Annuity Table, at 1.5% interest for 5 years, the factor is 17.16864. O $52, 337.28; it is better to pay $25,000 cash $4, 782.64 it is better to finance the purchase $27,565.28; it is better to pay $25,000 cash $22,782.64; it is better to finance the purchase
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:2. Calculate the present value to purchase a lot of land if $18,000 is put down and $2,000 is paid per quarter for 5 years. Assume that there is 6% interest that is compounded quarterly
if the cash price for the land is $25, 000, is it better to pay cash or finance the purchase?
According to the Present Value of an Annuity Table, at 1.5% interest for 5 years, the factor is 17.16864.
$52, 337.28; it is better to pay $25,000 cash
$4, 782.64, it is better to finance the purchase
$27, 565,28; it is better to pay $25,000 cash
O $22,782.64; it is better to finance the purchase
gb2
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