This looks like a simple arithmetic series. Each term is 7 greater than the previous term.

Therefore, the Nth term is 17 + 7N.

For example, the first term is 17 + 7*1 = 17 + 7 = 24.

The second term is 17 + 7*2 = 17 + 14 = 31

etc...

And the 500th term is 17 + 7 * 500 = 17 + 3500 = 3517

3 0

3 years ago

The Dallas Development Corporation is considering the purchase of an apartment project for $100,000. They estimate that they wil

katovenus [111]

Answer:

The rate of return is 8.15%

This is a good investment

Explanation:

For the first question, you need to find the rate that makes the present value of a stream of ten constant annual payments of $15,000 equal to the $100,000 investment.

The formula that returns the present value of a constant payment is called the annuity formula and is:

$Present\text{ }value=payment\times \bigg[\dfrac{1}{r}-\dfrac{1}{r(1+r)^t}\bigg]$

In your problem you know:

Present value: $100,000
payment: $15,000
r: ?
t: 10

You cannot solve for r directly. You must guess a value and calculate the right side of the equation until to you find the rate that makes it equal to 100,000.

Try 5%:

$\$15,000\times \bigg[\dfrac{1}{0.05}-\dfrac{1}{0.05(1+0.05)^{10}}\bigg]=\$115,826$

Then, the rate of return is greater than 5%. After several trials you will find that the rate of return is 8.15%.

Since this rate is higher than 8%, which is what the company requires, this is a good investment.

5 0

3 years ago