Answer the Following Questions

question 108

Essay

Answer the following questions.
a. Miserly Mark claims that, at a 10% interest rate, every $38.55 spent today reduces the amount of a person's savings by almost $100 in 10 years. Prove whether Miserly Mark is right.
b. Tom is considering an investment that gives a $400 payout in one year and a $600 payout in two years. If interest rates are 6%, what is the maximum price that Tom should pay for this investment?
c. If Franco deposits $1,000 today in his account, he will have $1,200 at the end of two years. What is the annual compounded interest rate on Franco's account?

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, typically associated with machinery, equipment, or vehicles.

Payback Period

The length of time required to recover the cost of an investment or project from its cash flows.

Initial Investment

The initial amount of money invested in a project or startup business.

Salvage Value

The projected salvage value of an asset at the termination of its useful life.