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Michael and Sandy Purchased a Home for $100,000 Five Years

question 139

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Michael and Sandy purchased a home for $100,000 five years ago.If it appreciated 6% annually,what is it worth today?


Definitions:

User Cost

The opportunity cost of extracting and selling a nonrenewable natural resource today rather than waiting to extract and sell the resource in the future; the present value of the decline in future revenue that will occur because a nonrenewable natural resource is extracted and sold today rather than being extracted and sold in the future.

Market Price

The current price at which a good or service can be bought or sold in a marketplace.

User Cost

The cost of using a good or service, which includes the opportunity cost of choosing one alternative over others.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

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