« previous next »

Author Question: Kevin has a lot of free time and he decides to pick up a new hobby. He has two optionshe can take ... (Read 68 times)

faduma

  • Hero Member
  • *****
  • Posts: 528
on: Jun 29, 2018
Kevin has a lot of free time and he decides to pick up a new hobby. He has two optionshe can take art classes or can sign up for French cooking classes.
 
  He estimates that the art classes would cost him 70, and would provide him with a benefit of 100. On the other hand, the cooking classes would cost him 120, but provide him benefits worth 160. Use cost-benefit analysis to arrive at the optimum choice for Kevin.

Question 2

What is the present value of 10,000 to be received after one year, if the current annual rate of interest is 6?
 
  A) 8,644.26
  B) 8,922.34
  C) 9,433.96
  D) 10,000


kjohnson

  • Sr. Member
  • ****
  • Posts: 330
Reply #1 on: Jun 29, 2018
Answer to Question 1

Kevin's optimal choice would depend on the net benefits of both options.
Net benefit of taking up art classes = 100 - 70 = 30
Net benefit of taking up cooking classes = 160 - 120 = 40
Therefore, given the costs and benefits involved, Kevin should sign up for the French cooking classes rather than the art classes.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

After a vasectomy, it takes about 12 ejaculations to clear out sperm that were already beyond the blocked area.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

Medications that are definitely not safe to take when breastfeeding include radioactive drugs, antimetabolites, some cancer (chemotherapy) agents, bromocriptine, ergotamine, methotrexate, and cyclosporine.

Did you know?

Vaccines cause herd immunity. If the majority of people in a community have been vaccinated against a disease, an unvaccinated person is less likely to get the disease since others are less likely to become sick from it and spread the disease.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

Meal Time Meal Time
Adenosine, Time of Day, and Hunger Adenosine, Time of Day, and Hunger
Results from sequential study of two cohorts tested at three ages and at three different points in t Results from sequential study of two cohorts tested at three ages and at three different points in t
Energy Transfer Processes: Free Convection Energy Transfer Processes: Free Convection
The environmental policy changes over time The environmental policy changes over time
Insomnia severity vs. time Insomnia severity vs. time
Video: Facilitated Diffusion - Glucose transport

For a complete list of videos, visit our video library