Friend wants you to buy a parcel of land with expected value to increase to $80,000 in the next 5 years. Your other investments yield 5% and you believe the land will increase in value to $80,000. What's the maximum you should offer and be competive with your other investments. A. Cash Diagram B. C. D. Calculation Factor Notation Excel
Friend wants you to buy a parcel of land with expected value to increase to $80,000 in the next 5 years. Your other investments yield 5% and you believe the land will increase in value to $80,000. What's the maximum you should offer and be competive with your other investments. A. Cash Diagram B. C. D. Calculation Factor Notation Excel
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer all parts of the economics problem
Transcribed Image Text:Present Value
Friend wants you to buy a parcel of land with expected value to increase to $80,000 in the next 5 years.
Your other investments yield 5% and you believe the land will increase in value to $80,000. What's the maximum you should offer?
and be competive with your other investments.
A.
Cash Diagram
B.
C.
D.
Calculation
Factor Notation
Excel
Expert Solution
Step 1
Present worth is the discounted value of money at a given interest rate for a given time period.
P=F*[1/(1+i)^n]
Given information
Expected future value of the land=$80000
Time=5 Years
Interest rate=5%
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