Lloyd is a divorce attorney who practices law in Florida. He 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 a great deal. Suppose that the appropriate annual interest rate is 8.5%. What is the minimum number of years that Lloyd 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 19 years O 13 years O 15 years O20 years
Lloyd is a divorce attorney who practices law in Florida. He 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 a great deal. Suppose that the appropriate annual interest rate is 8.5%. What is the minimum number of years that Lloyd 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 19 years O 13 years O 15 years O20 years
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:Lloyd is a divorce attorney who practices law in Florida. He 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
a great deal. Suppose that the appropriate annual interest rate is 8.5%. What is the minimum number of years that Lloyd 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 19 years
O 13 years
O 15 years
O 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 4% annual interest rate, what is its value as of 2012 (386 years later)?
O $76,647,701.66
O $90,173,766.66
O $103,699,831.66
O $119,029,371.99
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