You have choice when subscribing to our magazine for four years: you can Option A: pay $100 now for a four year subscription, Option B: pay $30 at the end of each year for four years, Option C: pay $50 today and $60 again three years from today. Which is the best deal for you, the subscriber, if the interest is 10% yearly?

You have choice when subscribing to our magazine for four years: you can Option A: pay $100 now for a four year subscription, Option B: pay $30 at the end of each year for four years, Option C: pay $50 today and $60 again three years from today. Which is the best deal for you, the subscriber, if the interest is 10% yearly?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Compound interest is a very powerful way to save for your retirement. Saving a little and giving it…

A: Formula for the future value of annuity is given as:

Q: A bank account pays 4.5% annual interest, compounded monthly. How much must be deposited now so that…

A: Here, given information is: Interest rate (r): 4.5% annually Compounding period (m): 12 (monthly)…

Q: Joe Grant won the state lottery for $20M. He will receive $600,000 per year after taxes for 20…

A: Joe Grant won a lottery and will receive $600,000 per year after taxes. The expected annual interest…

Q: Calculate the effective annual rate of interest which is equivalent to an effective rate of interest…

A: Present value is the value of investment in today's dollar.Future value is the value of investment…

Q: A project's annual revenue will be $50,000 the first year and will decrease by $1500 per year over…

A: Given a specific return rate, the present value of an investment is its future cash flow value…

Q: You earn SEK 10,000 for three years. After these three years, you have SEK 13,000. The interest rate…

A: Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to…

Q: You are eligible for a 30 year fixed-rate home mortgage with an interest rate of 3.6% per year. If…

A: Present value is the concept that states that an amount of money invested today is worth more than…

Q: The average growth rate for a certain stock over the last 50 years is reported to be 12% compounded…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: You deposit $6000 into an 7% account today. At the end of two years, you will deposit another $2500.…

A: Amount after compound interest is applied is calculated by using the formula A = P(1+r) n

Q: The company you work for assumes that a piece of equipment will need to be replaced in 10 years.…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: The nominal interest rate is 14% compounded semiannually. What amount will need to be deposited…

A: Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Q: Suppose you were given a one time gift of $10,000 to put into a savings account. The account earns…

A: Compound interest is the rate of interest that is used to calculate the value added to a loan or a…

Q: If you are interested in buying some shares of this stock for a total of $200 and will hold them for…

A: Introduction: The total of future investment returns discounted at a given level of expected return…

Q: If marry put $100,000 into an account that pays 4.5% annual interest, and she plan to withdraw…

A: here we calculate the time when account of Marry will empty by calculating the future value so the…

Q: On January 1, 2005, a person’s savings account was worth $200,000. Every month thereafter, this…

A: Part 2: Explanation:Step 1: Calculate the Future Value (FV) using the formula for compound…

Q: $1150 (1+0.0644) 12 = 2,421,01 25. What is the value of $400 at interest rate of 5.87% after 10…

A: Present value formula:

Q: In 2012 the maximum Social Security deposit by an individual was $8, 386.75. Suppose you are 31 and…

A: Future value is the sum of money that a certain present sum of money becomes after compounding at…

Q: A store is expected to generate $10,000 in earnings next month. How much earnings will be…

A: Earning generated next month = 10,000 Earning increase every month = 0.3%Annual Interest rate =…

Q: You deposit $100 now, and another $100 at the end of 20 years. The account earns a nominal discount…

A: The formula of future value is F=P1+in Here i is the interest rate per period and n is the number of…

Q: Compound interest is a very powerful way to save for your retirement. Saving a little and giving it…

A: An annuity is defined as a series of payments which are of fixed amounts at fixed intervals.There…

Q: Suppose you borrow $5,000 at 7.25% interest for 14 months. What is the maturity value?

A: Simple interest is one of the easiest method to compute the amount to be received at the end of…

Q: If a student makes monthly deposits of $1,200 into an account with a nominal annual interest rate of…

A: Student makes monthly deposits of $1,200 into an account with a nominal annual interest rate of 4.5%…

Q: Assume that a 24-month CD purchased for $3000 pays an APY of 4.25% (and of course interest is…

A: I have assumed that it is compounded monthly. number of compounding periods: nlength of time: 2 (…

Question

You have choice when subscribing to our magazine for four years: you can

Option A: pay $100 now for a four year subscription,

Option B: pay $30 at the end of each year for four years,

Option C: pay $50 today and $60 again three years from today.

Which is the best deal for you, the subscriber, if the interest is 10% yearly?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Lindsey plans to deposit her annual bonus into a savings account that pays 3% interest compounded annually. The size of her bonus increases by $1000 each year, and the initial bonus amount she will deposit at the end of year 1 is $2,500. a) Determine how much will be in the account immediately after the 6th deposit. b) What's the future value if she only plans to deposit her annual bonus for 8 years (the last deposit is at the end of year 8)? c) What's the future value if she only plans to deposit her annual bonus for 8 years (the last deposit is at the end of year 8), but also plans to skip the deposits at the end of years 3 and 6?
Suppose you win a raffle held at a neighborhood elementary school fundraiser and are given the choice between two different ways to be paid. You can either accept the money in a lump sum immediately or in a series of payments over time. If you choose the lump sum payout, you receive $2,950 today. If you choose to collect payments over time, you receive three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. At an interest rate of 10% per year, the winner would be better off accepting the present value. At an interest rate of 12% per year, the winner would be better off accepting lump sum The lump sum is always better. The payments over time are always better. It will depend on the interest rate; advise her to get a calculator. O None of these answers is good advice. payments over time 7 since that choice has the greater since it has the greater present value. A couple years after you win the raffle, you and your friend are back at the same event. This…
You just accepted an offer from XYZ Petrochemical Company in Louisiana. As a sign up bonus, the XYZ will deposit $10,000 in a retirement account for you which generates 12% return annually. In addition, the company deposits $5,000 every year in the same account, if you stays with XYZ. How much money will be accumulated in this account if you decide to retire 40 years from now?
The nominal interest rate is 14% compounded semiannually. What amount will need to be deposited every six months to be able to have enough money to pay three annuity payments of $20,000 for three years beginning at the end of year seven? The deposits begin now and continue every six months until six deposits have been made. The amount to be deposited every six months is $ (Round to the nearest dollar.)
Please answer very soon will give rating surely
Question 3 You are looking at purchasing a new computer for your four-year undergraduate program. Brand 1 costs $4,040 now, and you expect it will last throughout your program without any upgrades. Brand 2 costs $2,440 now, and will need an upgrade at the end of two years, which you expect to be $1,725. With an 8% annual interest, compounded monthly, which is the less expensive alternative, if they provide the same level of service and will both be worthless at the end of the four years? [NOTE: In general and unless asked for otherwise, comparisons of project should be conducted in present worth dollars] Which Brand is preferred (enter either '1' or '2')? How much will you save by purchasing your preferred brand over the other? (Round your answer to the nearest dollar and enter it as a positive number) $
Assuming I deposit my signing bonus of $36,000 at 9% APR, compounded annually, how much will I have upon retirement in 20 years?
Compound interest is a very powerful way to save for your retirement. Saving a little and giving it time to grow is often more effective than saving a lot over a short period of time. To illustrate this, suppose your goal is to save $1 million by the age of 70. What amount of money will be saved by socking away $3,038 per year starting at age 23 with a 7% annual interest rate. Will you achieve your goal using the long-term savings plan? What amount of money will be saved by socking away $20,406 per year starting at age 48 at the same interest rate? Will you achieve your goal using the short-term savings plan? Click the icon to view the interest and annuity table for discrete compounding when i = 7% per year. The future equivalent of the long-term savings plan is $. (Round to the nearest dollar.) C
Using the formula, not the table
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?
Gurpreet already had a balance of $1700 on her credit card when she used it to purchase items worth another $335. The minimum monthly payment is 3% of the outstanding balance or $30 dollars, whichever is greater, and the interest rate is 19.7%, compounded daily. If Gurpreet pays only the minimum each month, how long will it take her to pay off the balance? How much interest would she end up paying?