Jimmy owns a piece of land worth $400000. Bill wants to buy the land from Jimmy...

 

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Jimmy owns a piece of land worth $400000. Bill wants to buy the land from Jimmy by offering him a 10% deposit on the land and 2 equal payments of $177500 at the end of every 2 years for the next 4 years. If money is worth j₁ = 4% for the 1st 2 years and j4 = 5.25% afterwards, should Jimmy accept the offer? Based on your decision how much money would Jimmy make (or save) at the time of the last payment by his decision? Jimmy owns a piece of land worth $400000. Bill wants to buy the land from Jimmy by offering him a 10% deposit on the land and 2 equal payments of $177500 at the end of every 2 years for the next 4 years. If money is worth j₁ = 4% for the 1st 2 years and j4 = 5.25% afterwards, should Jimmy accept the offer? Based on your decision how much money would Jimmy make (or save) at the time of the last payment by his decision?

Answer rating: 100% (QA)

To determine if Jimmy should accept the offer we will calculate the present value of the payments Bi... View the full answer