2. Neneh rents a house for which she pays the landlord $25,000 per year. The house can be purchased for $250,000 and Neneh has this much money in her savings account that pays 6% interest per year. Neneh is considering to buy the house. Is buying the house a good deal for Neneh? (Hint: Consider Neneh's opportunity cost of buying the house and financial tradeoff: her lost interest vs. her gained rent)

2. Neneh rents a house for which she pays the landlord $25,000 per year. The house can be purchased for $250,000 and Neneh has this much money in her savings account that pays 6% interest per year. Neneh is considering to buy the house. Is buying the house a good deal for Neneh? (Hint: Consider Neneh's opportunity cost of buying the house and financial tradeoff: her lost interest vs. her gained rent)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. After receiving good reviews for her work at a series of art shows, Jean Rodin considers quitting her job as a management consultant to pursue full time her hobby of sculpting. Jean figures that she can sell $100,000 worth her art each year. She found a studio that she can rent for $2,000 per month and know that materials will cost her $20,000 per year. She now earns $90,000 per year. If her calculations are correct, Jean's annual economic profits from the venture will be. a) $80,000 b) $56,000 c) $10,000 d) -$34,000
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