Question

Becky is 18 and would like to buy a house when she is 36. What is the discount factor for today’s prices if the housing values increase 6% per year?

Answer 1

\((1+.06)^{36-18}\)

?

Answer 2

that wouldnt be one of my answer choices...

Answer 3

i tried it

Answer 4

hmm i think thats the answer

Answer 5

scratch that

Answer 6

here question is actually asking to find the factor by which you multiply the future value, to get the current value, right ?

Answer 7

Well, i know the answer has to be a %

Answer 8

so i suppose thats a yes

Answer 9

ok.. then we should do a inverse :

1/(1+.06)^18

= 0.350343791

Answer 10

i just did that and mine came out to 2.84 :/

Answer 11

inverse it..

Answer 12

but if i multiply your answer by 100, i get one of my answer choices which is 35%

Answer 13

yeah

(future value) = (current value) * (1+.06)^18

right ?

Answer 14

No, i only multiplied by 100 to get a % instead of a decimal

Answer 15

(current value) = (1/(1+.06)^18) * (future value)

Answer 16

yes!

Answer 17

this our discount factor then
(1/(1+.06)^18)

Answer 18

thank you

Answer 19

yw ^_^

Answer 20

do you maybe know how to calculate this


Rudy has been awarded some money in a settlement. He has the option to take a lump sum payment of $200,000 or get paid an annuity of $1,000 per month for the next 25 years. Which is the better deal for Rudy, and by how much, assuming the growth rate of the economy is 2.75% per year?

Answer 21

noo im scared of annuity... lol they are tough problems :\

post it freshly... someone wil help u gud luck :)

Answer 22

i have to use FV=PV(1+i)^nt backwards but idk how. But thank you

Answer 23

i think you have to use the annuity formula... i know how to do this. but i dont know why it works :( i only know only the formula...

Answer 24

oh wait, i have to divide the result of (1+i) on both sides

Answer 25

here, i = r/n ?

Answer 26

35.0%