« previous next »

Author Question: Suzy wants to buy a house but does not want to get a loan. The average price of her dream house is ... (Read 70 times)

Arii_bell

  • Hero Member
  • *****
  • Posts: 596
on: Jul 10, 2018
Suzy wants to buy a house but does not want to get a loan. The average price of her dream house is 500,000 and its price is growing at 5 percent per year.
 
  How much should Suzy invest in a project at the end of each year for the next 5 years in order to accumulate enough money to buy her dream house with cash at the end of the fifth year? Assume the project pays 12 percent rate of return.

Question 2

For a project that has an initial cash outflow followed by cash inflows, the profitability index (PI) is equal to the present value of cash inflows divided by the cost of capital.
 
  Indicate whether the statement is true or false


beccamahon

  • Sr. Member
  • ****
  • Posts: 338
Reply #1 on: Jul 10, 2018
Answer to Question 1

FV = 500,000(1.05)5 = 638,141
PV= 0, I=12, N=5, FV=638,141, CPT PMT = 100,450

Answer to Question 2

FALSE


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Multiple sclerosis is a condition wherein the body's nervous system is weakened by an autoimmune reaction that attacks the myelin sheaths of neurons.

Did you know?

Vampire bats have a natural anticoagulant in their saliva that permits continuous bleeding after they painlessly open a wound with their incisors. This capillary blood does not cause any significant blood loss to their victims.

Did you know?

Approximately one in four people diagnosed with diabetes will develop foot problems. Of these, about one-third will require lower extremity amputation.

Did you know?

Essential fatty acids have been shown to be effective against ulcers, asthma, dental cavities, and skin disorders such as acne.

Did you know?

Nearly all drugs pass into human breast milk. How often a drug is taken influences the amount of drug that will pass into the milk. Medications taken 30 to 60 minutes before breastfeeding are likely to be at peak blood levels when the baby is nursing.

Average winter rainfall and variation in rainfall among sites inhabited by Suromalus ater Average winter rainfall and variation in rainfall among sites inhabited by Suromalus ater
In the summer of 1793, a yellow fever epidemic struck Philadelphia, killing nearly 4,000. Tens of th In the summer of 1793, a yellow fever epidemic struck Philadelphia, killing nearly 4,000. Tens of th
Average Global Temperature during the Phanerozoic Average Global Temperature during the Phanerozoic
Martha Rosler, Gladiators, from the series House Beautiful: Bringing the War Home. 2004 Martha Rosler, Gladiators, from the series House Beautiful: Bringing the War Home. 2004
A Scatterplot of the Test Scores and Average Grades of 10 Students A Scatterplot of the Test Scores and Average Grades of 10 Students
Modern house door design Modern house door design
Video: Mendel's Pea Experiment

For a complete list of videos, visit our video library