For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative should you choose? Choice 3: Wait 5 years and take $3,000 Choice 1: Take $1,000 today Choice 2: Wait 3 years and take $1,500 Choice 2: P = $ Choice 3: P = $ Round entry to the nearest dollar. Tolerance is ±4.

For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative should you choose? Choice 3: Wait 5 years and take $3,000 Choice 1: Take $1,000 today Choice 2: Wait 3 years and take $1,500 Choice 2: P = $ Choice 3: P = $ Round entry to the nearest dollar. Tolerance is ±4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

! show FULL SOLUTION & use the given data properly ! *using Ordinary Annuity Formulas A service car whose cash price was P 540,000 was bought with a down payment of P162,000 and monthly of P10, 874.2 for five years. What was the rate of interest compounded monthly?
A person needs $19,000 immediately as a down payment on a new home. Suppose that she can borrow this money from her company credit union. She will be required to repay the loan in equal payments made every six months over the next 12 years. The annual interest rate being charged is 8% compounded continuously. What is the amount of each payment? The amount of each payment is?
Q2. You want to purchase a car that worth $22,678 by making a down payment of $2,678 and paying the remaining amount over 48 monthly installments. What would be the monthly payment amount if the APR was 8.5%?
If you had $ 1,000 now and invested it at 7% interest compounded annually, how much would it be worth in eight years ( Figure 2.8)?
Now that young King Solomon has inherited the kingdom of Israel, and a massive amount of wealth that he can invest, he wants to plan for his "retirement." Since he doesn't know how long he'll live, and data on life expectancy is scarce, he reasons that he just wants a regular "cash flow" over the course of his life. With that in mind, how many shekels would he need to deposit at 20 percent interest compounded every year in order to be able to withdraw 50 shekels at the end of every year for seventy years?
(3) Suppose we invested $20,000 at an annual rate of 5% where interest is compounded continuously. (a) Write down an IVP that describes the amount of money y(t) that you will have in your account after t years. Then, solve the IVP and compute how much money you expect to have in your account after 10 years. (b) Now suppose you want to have $100,000 in your account after those 10 years. In order to accomplish that, you will make yearly deposits of D dollars. Find D, so that y(10) = $100,000. Note that we still have y(0) = $20,000.
You are saving up for a down payment on a house. You will deposit $600 a month for the next 24 months in a money market fund. How much will you have for your down payment in 24 months if the fund earns 12% APR compounded monthly?
Bob signs a note promising to pay Marie $ 4,875 in 8 years at 8 % compounded monthly. Then, 110 days before the note is due, Marie sells the note to a bank which discounts the note based on a bank discount rate of 16 %. How much did the bank pay Marie for the note?
You have a bank deposit now worth $4500.How long will it take for your deposit to be worth more than $8600 if: The account pays 6 percent actual interest every half-year and is compounded every half-year?
You need to accumulate $10,000. To do so, you plan to make deposits of $1,450 per year with the first payment being made a year from today - into a bank account that pays 7% annual interest. Your last deposit will be less than $1,450 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Do not round intermediate calculations. Round your answer up to the nearest whole number. _year(s) How large will the last deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $
You are considering investing $2,500 at an interest rate of 7.7% compounded annually for seven years or investing the $2,500 at 8% per year simple interest for seven years. Which option is better?
If you need $25,000 in 14 years, how much will you need to deposit today if you can earn 10 percent per year compounded continuously? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)