Need help with this review. I also added some of my notes, maybe it would make i

Question

Need help with this review. I also added some of my notes, maybe it would make it easier for you/me to understand eachother and the material better! Please answer all 4 questions!

PLEASE ANSWER ALI.4 QUESTIONS. Please give explanation for answer please. (Finals review) A) If someone offers you $200,000 B) If someone offers you $200,000 to to sell your apartment/house this year and the market of rate and the market rate of interest is interest is 10% and you expect to 10% and you expect to be able to be able to sell next year for $230,000: Should you sell orexpected to get $215,000 next year should you wait and sell nextwhat should you do? year? sell your apartment/house this year next year for $230,000: If you only - Sell now Sell Later -Never sell Wait for the interest rate to change -Sell now -Sell Later -Never sell Wait for the interest rate to change

Explanation / Answer

A. You should wait and sell next year. Explaination: Suppose you sell the house this year, you will receive $200,000 and since the rate of interest this year is 10%, if you invest the $200,000 at 10%, you will get $220,000 by end of this year/start of next year. However, if you decide to sell the house next year, you will get $230,000. This means that by selling the house next year you will gain $10,000.

B. You should sell now. Explaination: Suppose you sell the house this year, you will receive $200,000 and since the rate of interest this year is 10%, if you invest the $200,000 at 10%, you will get $220,000 by end of this year/start of next year. However, if you decide to sell the house next year, you will get $215,000. It means that by selling the house this year you will gain $5,000.

C. To make a selling decision, we take into account the discounted present value and the expected selling price.

D. Prices in the market for nonrenewable resources follow hotelling's rule, meaning prices should rise at the rate of interest.

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.