(a) Show the equation for determining the rate of return for buying alife membership. (b) What is the rate of return?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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1. You have just been elected into the “Society of Honorable
Engineers.” First-year dues are waived in honor of your election.
Thus, your first-payment of $200 is due at the end of the year, and
annual dues are expected to increase 3% annually. After 40 years of paying dues you become a life member and pay no more dues.
Instead of paying annual dues, however, you can pay a one-time
$2000 life membership fee.

(a) Show the equation for determining the rate of return for buying alife membership.

(b) What is the rate of return?

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