The Smiths are buying a house for $200,000. After their 10% down payment, they have also decided to pay two discount points. Wha
1 answer:
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Answer:
a-The present value of revenue in the first year is $61,085.92.
b-The total time it would take to pay for its price is 2.44 years of 29.33 months.
Explanation:
a-
Let the function of the revenue earned is given as
Here
- a and b are the limits of integral which are 0 and 1 respectively
- r is the rate of interest which is 5% or 0.05
- S(t) is the function of value which is
So the present value of revenue in the first year is $61,085.92.
b-
The time in which the machine pays for itself is given as
The present value is set equal to the value of machine which is given as
$160,000 so the equation becomes:
So the total time it would take to pay for its price is 2.44 years of 29.33 months.
Answer:
(a) $34.4
(b) $38.70(Approx).
(c) $61.9524
Explanation:
(a) Current price:
= $34.4
We use the formula:
where,
A = future value
P = present value
r = rate of interest
n = time period
(b)
= 34.4 × 1.124864
= $38.6953
= $38.70(Approx).
(c)
= 34.4 × 1.80094351
= $38.6953
= $61.9524