Author Question: A beach house in Southern California now costs 350,000. Inflation is expected to cause this price to ... (Read 124 times)

Pea0909berry · **on:** Jul 10, 2018

A beach house in Southern California now costs 350,000. Inflation is expected to cause this price to increase at 5 percent per year over the next 20 years before Eric and Karinna retire from successful careers in commercial art.

How large an equal annual end-of-year deposit must be made into an account paying an annual rate of interest of 13 percent in order to buy the beach house upon retirement?
A) 11,472
B) 4,323
C) 79,977
D) 17,350

Question 2

The payback period is generally viewed as an unsophisticated capital budgeting technique, because it does not explicitly consider the time value of money by discounting cash flows to find present value.

Indicate whether the statement is true or false