1. You have just purchased $6000 shares of company XYZ. You will sell the stock when its market has doubled. If you expect the stock price to increase 20% per year, how long do you anticipate waiting before selling the stock?
2. You are buying a new appliance. From past experience you estimate future repair costs as: First year.......... $5 Second year .... $15 Third year ........ $25 Fourth tear ....... $35
The dealer offers to sell you a four-year warranty for $60. you require at least a 6% interest rate on your investments. Should you invest in the warranty? support your answer with calculations.
3. It is estimated that the annual maintenance cost of a statue erected in front of a public building in a state capital would be $2,500. Assuming an interest rate of 4% year compounded quarterly, determine the capitalized cost for maintaining the statue.