BUSN380 Week 1 TCO 1 Problem Set 1 - Time Value of Money Relationships & Applications; Opportuni

BUSN380 Week 1 TCO 1 Problem Set 1 - Time Value of Money Relationships & Applications; Opportuni

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BUSN380 Week I Assignment – Problem Set 1 TCO 1 Time value of money relationships & applications; opportunity costs; personal financial statements - Problem Set 1 (Note: Some of these problems require the use of the time value of money tables in the Chapter 1 Appendix, pp. 36-39). 1. Ben Collins plans to buy a house for $65,000. If that real estate property is expected to increase in value 5 percent each year, what would its approximate value be seven years from now? Ans. $65,000 × 1.407 = $91,455 2. At an annual interest rate of five percent, how long would it take for your savings to double? Ans. About 14.4 years (72 / 5) 3. In the mid-1990s, selected automobiles had an average cost of $12,000. The average cost of those same motor vehicles is now $20,000. What was the rate of increase for this item between the two time periods? Ans. ($20000 - $12,000) / $12,000 = .667 (67 percent) 4. A family spends $28,000 a year for living expenses. If prices increase by 4 percent a year for the next three years, what amount will the family need for its living
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This note was uploaded on 05/27/2011 for the course BUSN 380 taught by Professor Bloch during the Fall '10 term at DeVry NY.

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BUSN380 Week 1 TCO 1 Problem Set 1 - Time Value of Money Relationships & Applications; Opportuni

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