Conrad has $10,000; he is considering whether to (1) invest in a mutual fund with an 8% annual interest rate or (2) remodel his kitchen. If he remodels the kitchen, he will be able to sell his home for an additional $13,000 when he moves at the end of five years. Which of the following statements is (are) TRUE? 
Definitions:
Discount Rates
The interest rate that the Federal Reserve or a central bank charges depository institutions on loans they receive, or more broadly, the interest rate used to discount future cash flows to their present value.
Initial Purchase Price
The amount paid to buy a good or service for the first time, not including additional costs like maintenance or insurance.
Present Value
is a financial concept that calculates the current worth of an amount of money that is to be received in the future, taking into account a specific rate of interest.
Cigarette Purchases
The act of buying cigarettes, often analyzed in economics to study the effects of taxes, regulations, and other factors on consumer behavior.
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