you are thinking of buying a craft emporium. It is expected to generate cash flows of Rs. 30,000 per year in years 1 through 5,
1 answer:
You might be interested in
Answer:
- <u><em>No, he will not have enough money to buy his delivery truck at the end of 6 years.</em></u>
Explanation:
To find how much<em> money Earl Mille</em>r, <em>owner of Papa Gino's franchise</em>, will have in <em>6 years</em>, you must calculate the value of the <em>$20,000</em> that he <em>invests</em> at the <em>5% compounded semiannually:</em>
- Semianual compounded interest: 5% / 2 = 0.05/2 = 0.025
Equation:
Where r/n was already calculated: r/n = 0.05/2 = 0.025; and t is the number of years: 6.
Hence the value of the money invested is less than the value of the truck, and <em>he will not have enough money to buy his delivery truck at the end of 6 years.</em>