Authors libby rittenberg 731

Percent Interest 49 18 06 11 42 75 92 75 20 16.3 13.5 11.4 9.81 8.5 51 90 70 14 7.4 69 6.6 23 5.9 29 5.3 53 4.8 70 25 19.5 15.6 12.7 10.6 9.0 23 22 83 75 77 7.8 43 6.8 73 6.0 97 5.4 67 4.9 48 30 22.3 17.2 13.7 11.2 9.4 96 92 65 58 27 8.0 55 7.0 03 6.1 77 5.5 17 4.9 79 40 27.3 19.7 15.0 11.9 9.7 55 93 46 25 79 8.2 44 7.1 05 6.2 33 5.5 48 4.9 97 50 31.4 21.4 15.7 12.2 9.9 24 82 62 33 15 8.3 04 7.1 33 6.2 46 5.5 54 4.9 99 Your Uncle Arthur, not to be outdone by Aunt Carmen, offers you a choice You can have $10,000 now or $30,000 in 15 years If you took the payment now, you could put it in a bond fund or bank account earning 8% interest Use present value analysis to determine which alternative is better Remember Carol Stein’s tractor? We saw that at an interest rate of 7%, a decision to purchase the tractor would pay off; its net present value is positive Suppose the tractor is still expected to yield $20,000 in net revenue per year for each of the next years and to sell at the end of years for $22,000; and the purchase price of the tractor still equals $95,000 Use Tables (a) and (b) to compute the net present value of the tractor at an interest rate of 8% Mark Jones is thinking about going to college If he goes, he will earn nothing for the next four years and, in addition, will have to pay tuition and fees totaling $10,000 per year He also would not Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 731