You would like to vacation in Hawaii for one week each year. You can buy a time
Question:
You would like to vacation in Hawaii for one week each year.
You can buy a time share for a vacation home in Hawaii for $18,500 today and a maintenance fee of $600 per year starting next year. You expect to sell the time share in 10 years for $19,000 .
Alternatively you can just pay for the week vacation each year (starting next year). Each year will cost you $1,500 .
If your investments earn 5% per year (compounded annually) which alternative is cheaper and by how much in present value terms?
Group of answer choices
Buy the time share it will save you $120
Pay each year it will save you $122
Pay each year it will save you $110
Buy the time share it will save you $114
please work out
Financial management theory and practice
ISBN: 978-1439078099
13th edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt