You have entered into an agreement for the purchase of land. The agreement specifies that you will take ownership of the landimmediately. You have agreed to pay $50,000 today and another $50,000 in three years. Calculate the total cost of the land today,assuming a discount rate of (a) 5%, (b) 7 %, or (c) 9%.Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of$1)a.b.C.PaymentAmount$ 50,00050,00050,000InterestRate75%7%9%Answer is complete but not entirely correct.CompoundingAnnuallyAnnuallyAnnuallyPeriodDue3 years3 years3 years$Total Cost ofLand Today93,121.25 X90,816.30✔88,617.30

Present Value is the current price of future value which will be received in near future at some…

Answered: You have entered into an agreement for…

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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A property was purchased for $7260.00 down and payments of $1322.00 at the end of every three months for 4 years. Interest is 3% per annum compounded monthly. What was the purchase price of the property? How much is the cost of financing? The purchase price of the property was $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) The cost of financing is $. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
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Billy Dan and Betty Lou were recently married and want to start saving for their dream home. They expect the house they want will cost approximately $255,000. They hope to be able to purchase the house for cash in 7 years. To determine the appropriate discount factor(s) using tables, click here to view Tables I. II. II. or IV in the appendix. Alternatively, if you calculate the discount factor(s) using a formula, round to six (6) decimal places before using the factor in the problem. Required a. How much will Billy Dan and Betty Lou have to invest each year to purchase their dream home at the end of 7 years? Assume an interest rate of 9 percent. b. Billy Dan's parents want to give the couple a substantial wedding gift for the purchase of their future home. How much must Billy Dan's parents give them now if they are to reach the desired amount of $255,000 in 9 years? Assume an interest rate of 9 percent. Complete this question by entering your answers in the tabs below. Required A…
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You work in a company. You are offered the choice of two payments streams. A. $250 paid now. B. $150 paid now, $50 paid three months from now, and $150 paid ten months from now. If you want both of them to be equal, What should the intrest rate be?

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