- 13 A Piece Of Land Is Used To Grow Apples That Produces A Net Profit Of 100 When Considering All Costs Other Than The 1 (171.12 KiB) Viewed 34 times
13. A piece of land is used to grow apples that produces a net profit of $100 (when considering all costs other than the costs of using the land for apples) each period. The land lasts into perpetuity (infinite time) yielding the $100 profit each year. Given this stream of profits, how much would the land be worth in dollars assuming a 10% interest rate and infinite life (into perpetuity)? 14. If you place $100 in an account that pays 9% at the end of each year, and you leave your $100 and all your interest in the account, how much will you have in the account at the end of 8 years with annual compounding? What is the correct calculation? I 15. If the interest rate is positive, the future value of an interest bearing investment is always larger than the present value. Select one: True or false 16. At age 40, Flo is considering quitting her job and going back for a college degree. Flo needs two more years full-time to finish the degree. Tuition is $10,000 per year and she currently earns $30,000 per year. A college degree would raise Flo's annual income by $10,000 per year. She will retire in 30 years. Which of the following makes it less likely that Flo will decide to go back to college full-time? a. The rate of interest decreases b. Tuition decreases c. The government enacts mandatory retirement at age 60 d. The higher income of having a college degree rises