Please don't use Ai solution Linus earns $50,000 a year driving a school bus. He is considering enrolling in massage therapy school at a cost of $33,000. Ifhe becomes a massage therapist, he will earn $60,000 per year. Linus's plan is to work for four years as a massage therapist untilhe moves on to something else. (Assume Linus is paid at the end of each year).a. Given an interest rate of 7%, what is the net present valuefor Linus of attendingmassage therapy school?NPV = $b. Based on the financial return, Linusenroll in massage therapy school.c. If the interest rate rises to 10%, what is the net presentvalue for Linus of attending massage therapy school?NPV = $d. Given this change in the interest rate, Linusenroll in massage therapy school.

The problem pertains to the determination of the NPV. NPV or Net Present Value is the difference in…

Answered: Linus earns $50,000 a year driving a…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter29: Interest, Rent, And Profit

Section: Chapter Questions

Problem 2QP

See similar textbooks

Similar questions

Give typing answer with explanation and conclusion You have opened your own word-processing service. You bought a personal computer, and paid $5,000 for it. However, due to the cost changes in the computer industry, the current price of an equivalent machine is $2,500. You could sell any used machine for $1,000. If you were not word processing, you could earn $20,000 per year at an alternative job. Assume that the interest rate is 10%. You can also hire an assistant who can do everything that you can do for $20,000 per year (you would still continue to do word processing). One person using one computer can produce 11,000 typed pages per year, and the price per page for your service is $2. You are considering three options: (A) expand your business by hiring an assistant; (B) leave your business the way it is; (C) shut down. Fill in the Blank For Option B, economic profit is $_______.
What can be best said about a banker whose interest rate is 20% on a one-year loan worth $1000 today?
Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alex and Spenser each invest $50,000 in the same year. Alex invests in a no-load fund (that doesn’t charge the 0.25% fee) and earns 5% a year. Spenser uses another retirement fund that charges the 0.25% fee and so only earns 4.75%. After 30 years, how much more will Alex have than Spenser?
Give typing answer to all parts?
Dana was dating Wade, a wealthy real estate entrepreneur. Wade was much older than Dana and knew he needed to offer something “special” to make her stay. Wade told Dana that if she continued dating him, he would pay her $10,000 a month. Wade paid Dana for two years when suddenly, for no apparent reason, he stopped the monthly payments. Dana stayed with Wade for another six months, but decided enough was enough and left. She wanted the $60,000 she was owed for the six months; Wade refused to pay her. Is Dana entitled to the $60,000?
We need to find an effective interest rate that covers the payment period. Illustrate this concept with specific examples?
What will be the Savings given that income is $3200 and APS is 0.48
Suppose Neha is a sports fan and buys only baseball caps. Neha deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a baseball cap is priced at $10.00. Fill in the chart: 0% 5% 8% Number of Caps Neha Can Purchase after One Year Choices: 291, 305, 315, 582 Choices: 291, 300, 305, 582 Choices: 291, 305, 315, 582 Real Interest Rate When the rate of inflation is less than the interest rate on Neha's deposit, the purchasing power of her deposit __________ (options: falls, rises, remains the same) over the course of the year.
An engineer invests $5,800 at the end of every year for a 35-year career. If the engineer wants $1 million in savings at retirement, what interest rate must the investment earn?
15. Justine buys a television set from a merchant who asks P 1,250.00 at the end of 60 days (cash in 60 days). Justine wishes to pay immediately and the merchant offers to compute the cash price on the assumption that the money is worth 8% simple interest. What is the cash price today?
The Fly-by-Night finance company advertises a "bargain 6% plan" for financing the purchase of automobiles. To the amount of the loan being financed, 6% is added for each year money is owed. This total is then divided by the number of months over which the payments are to be made, and the result is the amount of the monthly payments. For example, a woman purchases a $10,000 automobile under this plan and makes an initial cash payment of $2,500. She wishes to pay the $7,500 balance in 24 monthly payments: Find the IRR and Effective Annual Interest rate. Purchase price -Initial payment = Balance due, (Po) +6% finance charge = 0.06 × 2 years × $7,500 = Total to be paid .. Monthly payments (A) = $8,400/24 = $10,000 2,500 7,500 900 8,400 $350
How is an Effective Interest Rate calculated?

SEE MORE QUESTIONS

Recommended textbooks for you

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS