- - d. Assume that a college parking sticker today costs $76. If the cost of par
ID: 2485250 • Letter: #
Question
- - d. Assume that a college parking sticker today costs $76. If the cost of parking is increasing at the rate of 5% per year, how much will a olege parking sticker cost in eight years? (Round your answer to a decimal places.) e. Assume that the average price of a new home is $120,500. If new homes are increasing at a rate of 10% per year, how much willanew home cost in eight years? (Round o 2 decimal Round your answer to 2 decimal places.) f. An investment will pay you $9,000 in 9 years, and it will also pay you $280 at the end of each of the next 9 years (years 1 thru 9) If the annual interest rate is 5%, how much would you be wiling to pay today for this type of investment? (Round your intermediate calculations and final answer to the nearest whole dollar.)Explanation / Answer
Cost of Sticker = 76 * 1.05^8 = 112.29
Price of home = 120500 * 1.1^8 = 258302.45
Present Value of investment = 280 * PVIFA(9 yr , 5%) + 9000 *PVIF(9 yr , 5%) = 280 * 4.329 + 9000 * 0.783 = 8259.12
Present Value of lottery = 475000 * PVIFA (20 yr , 6%) = 475000 * 11.47 = 5448250
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