Compound Interest, Future Value and Present Value
Not what you're looking for?
A person has to decide about buying a piece of land worth $28,000. It is expected, that in 2 years, the projected price of the land will be $32,500'. The person has a Compound Deposit worth $30,000 now, which earns 4% interest (compounded annually) and is bound to mature in 2 years. If the person cashes the Compound Deposit now, in order to buy the land, he will have to to pay an early withdrawal penalty of $600. Should the buyer purchase the land now or should he puchase after 2 years? Explain, giving reasons in support of your decision.
Purchase this Solution
Solution Summary
This solution is comprised of detailed explanation of the given problem and provides students with a clear perspective of the underlying concepts.
Solution Preview
The buyer has a C.D. worth $30000
If, he wants to buy the land now, he will have to cash the C.D. and will eventually have to pay $600 as penalty. ...
Education
- MSc, Osmania University
- MSc, Indian Institute of Technology - Roorkee (I.I.T.-ROORKEE)
- BSc, Banaras Hindu University
Recent Feedback
- "Very fast turnaround. Excellent communication! Much appreciated!"
- "excellent"
- "excellent"
- "excellent work"
- "Fantastic..great solution and very well explained!!!!"
Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Operations Management
This quiz tests a student's knowledge about Operations Management
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.