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 75 times)

faduma

  • Hero Member
  • *****
  • Posts: 528
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
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
 

Did you know?

All adverse reactions are commonly charted in red ink in the patient's record and usually are noted on the front of the chart. Failure to follow correct documentation procedures may result in malpractice lawsuits.

Did you know?

About 3.2 billion people, nearly half the world population, are at risk for malaria. In 2015, there are about 214 million malaria cases and an estimated 438,000 malaria deaths.

Did you know?

Asthma-like symptoms were first recorded about 3,500 years ago in Egypt. The first manuscript specifically written about asthma was in the year 1190, describing a condition characterized by sudden breathlessness. The treatments listed in this manuscript include chicken soup, herbs, and sexual abstinence.

Did you know?

Pope Sylvester II tried to introduce Arabic numbers into Europe between the years 999 and 1003, but their use did not catch on for a few more centuries, and Roman numerals continued to be the primary number system.

Did you know?

The top five reasons that children stay home from school are as follows: colds, stomach flu (gastroenteritis), ear infection (otitis media), pink eye (conjunctivitis), and sore throat.

For a complete list of videos, visit our video library