Chapter 4 Assignment Maria is a divorce attorney who practices law in San Francisco. She wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $500 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $4,500 and never have to pay annual membership dues. Obviously the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it's
Chapter 4 Assignment Maria is a divorce attorney who practices law in San Francisco. She wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $500 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $4,500 and never have to pay annual membership dues. Obviously the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it's
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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Chapter 4 Assignment
Maria is a divorce attorney who practices law in San Francisco. She wants to join the American Divorce Lawyers Association (ADLA), a professional
organization for divorce attorneys. The membership dues for the ADLA are $500 per year and must be paid at the beginning of each year. For
instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also
has an option for members to buy a lifetime membership today for $4,500 and never have to pay annual membership dues.
Obviously, the lifetime membership isn't a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it
it's
a great deal. Suppose that the appropriate annual interest rate is 8.5%.
O 13 years
O 15 years
What is the minimum number of years that Maria must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value
basis) than paying $500 in annual membership dues? (Note: Round your answer up to the nearest year.)
O 17 years
F4
20 years
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In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historians estimate that the price he paid for the
island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island
would be sold for $24, but you need to consider the future value (FV) of that price in more current times.
If the $24 purchase price could have been invested at a 5.75% annual interest rate, what is its value as of 2017 (391 years later)?
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Chapter 4 Assignment
F4
13 years
15 years
What is the minimum number of years that Maria must remain a member of the ADLA so that the lifetime membership is cheaper (on a present value
basis) than paying $500 in annual membership dues? (Note: Round your answer up to the nearest year.)
17 years
20 years
In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historians estimate that the price he paid for the
island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island
would be sold for $24, but you need to consider the future value (FV) of that price in more current times.
If the $24 purchase price could have been invested at a 5.75% annual interest rate, what is its value as of 2017 (391 years later)?
O $63,570,730,476.21
$74,789,094,677.89
$86,007,458,879.57
$98,721,604,974.81
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