Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner's insurance policy is $400 for the coverage they need. Their insurance company offers a discount of 5 percent if they install dead-bolt locks on all exterior doors. The couple can also receive a discount of 2 percent if they install smoke detectors on each floor. They have contacted a locksmith, who will provide and install dead-bolt locks on the two exterior doors for $45 each. At the local hardware store, smoke detectors cost $6 each, and the new house has two floors. Dave and Ellen can Install them themselves.
Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner's insurance policy is $400 for the coverage they need. Their insurance company offers a discount of 5 percent if they install dead-bolt locks on all exterior doors. The couple can also receive a discount of 2 percent if they install smoke detectors on each floor. They have contacted a locksmith, who will provide and install dead-bolt locks on the two exterior doors for $45 each. At the local hardware store, smoke detectors cost $6 each, and the new house has two floors. Dave and Ellen can Install them themselves.
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:how do i figure the recovery period?
Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner's Insurance policy is $400 for
the coverage they need. Their insurance company offers a discount of 5 percent if they install dead-bolt locks on all exterior doors.
The couple can also receive a discount of 2 percent if they install smoke detectors on each floor. They have contacted a locksmith,
who will provide and install dead-bolt locks on the two exterior doors for $45 each. At the local hardware store, smoke detectors cost
$6 each, and the new house has two floors. Dave and Ellen can Install them themselves.
0. Assuming their insurance rates remain the same, how many years will it take Dave and Ellen to earn back in discounts the cost of
the dead-bolts? (Round your answer to 2 decimal places.)
Recovery period
yoars
b. How many years will it take Dave and Ellen to earn back in discounts the cost of the smoke detectors? (Round your enswer to 2
decimal places.)
Recovery period
yoars
c. Would you recommend Dave and Ellen invest in the safety items if they plan to stay in that house for about 5 years?
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