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tiny-mole [99]
2 years ago
4

You inherited an oil well that will pay you $26,000 per year for 25 years, with the first payment being made today. If you think

a fair return on the well is 7.5%, how much should you ask for it if you decide to sell it?
Business
2 answers:
JulsSmile [24]2 years ago
7 0

Answer:

$311,557.14

Explanation:

Since the first payment being made today, the relevant formula to us the formula for calculating the present value (PV) of annuity due given as follows:

PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] × (1+r)  .................................. (1)

Where ;

PV = Present value or the sales amount to ask for =?

P = Annual payment =  $26,000

r = interest rate  = 7.5%, or 0.075

n = number of years  = 25

Substituting the values into equation (1) above, we have:

PV = 26,000 × [{1 - [1 ÷ (1 + 0.075)]^25} ÷ 0.075] × (1 + 0.075)

     = 26,000 × [{1 - [1 ÷ (1.075)]^25} ÷ 0.075] × (1.075)

     = 26,000 × 11.1469458606622  × 1.075

PV = $311,557.14

Therefore, you should ask for $311,557.14 if you decide to sell it.

Brums [2.3K]2 years ago
3 0

Answer: $311,557.14

Explanation:

GIVEN the following ;

Payment per period(PMT) = $26,000

Period(n) = 25 years

Rate of return (r) = 7.5% = 0.075

Asking price, if one decides to sell:

Using the formula for present value of annuity due;

Present Value (PV) :

PMT ×[ (1 - (1 + r) ^-n) ÷ r] × (1 + r)

$26,000 × [ (1 - (1 + 0.075)^-25) ÷ 0.075] × (1 + 0.075)

$26,000 × [ (1 - (1.075^-25)) ÷ 0.075] × 1.075

$26,000 × [11.146945860662] ×1.075

=$311557.13680550

=

Present Value if one decides to sell will be : $311,557.14 (2 decimal places).

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Explanation:

#include <iostream>

#include <vector>

using namespace std;

int main() {

   vector<int> jerseyNumber;

   vector<int> rating;

   int temp;

   for (int i = 1; i <= 5; i++) {

       cout << "Enter player " << i

            << "'s jersey number: ";

       cin >> temp;

       jerseyNumber.push_back(temp);

       cout << "Enter player " << i

            << "'s rating: ";

       cin >> temp;

       rating.push_back(temp);

       cout << endl;

   }

   cout << "ROSTER" << endl;

   for (int i = 0; i < 5; i++)

       cout << "Player " << i + 1 << " -- "

            << "Jersey number: " << jerseyNumber.at(i)

            << ", Rating: " << rating.at(i) << endl;

   char option;

   '

   while (true) {

       cout << "MENU" << endl;

       cout << "a - Add player" << endl;

       cout << "d - Remove player" << endl;

       cout << "u - Update player rating" << endl;

       cout << "r - Output players above a rating"

            << endl;

       cout << "o - Output roster" << endl;

       cout << "q - Quit" << endl << endl;

       cout << "Choose an option: ";

       cin >> option;

       switch (option) {

           case 'a':

           case 'A':

               cout << "Enter a new player's"

                    << "jersey number: ";

               cin >> temp;

               jerseyNumber.push_back(temp);

               cout << "Enter the player's rating: ";

               cin >> temp;

               rating.push_back(temp);

               break;

           case 'd':

           case 'D':

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               cin >> temp;

               int i;

               for (i = 0; i < jerseyNumber.size();

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                   if (jerseyNumber.at(i) == temp) {

                       jerseyNumber.erase(

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                       rating.erase(rating.begin() + i);

                       break;

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               }

               break;

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               for (int i = 0; i < jerseyNumber.size();

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