You have entered into an agreement for the purchase of land. The agreement specifies that...
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You have entered into an agreement for the purchase of land. The agreement specifies that you will take ownership of the land immediately. You have agreed to pay $46,000 today and another $46,000 in three years. Calculate the total cost of the land today, assuming a discount rate of (a) 3%, (b) 5%, or (c) 7%.
\begin{tabular}{|c|r|r|c|c|c|} \hline & \begin{tabular}{c} Payment \\ Amount \end{tabular} & \multicolumn{1}{c|}{\begin{tabular}{c} Interest \\ Rate \end{tabular}} & Compounding & Period Due & \begin{tabular}{c} Total Cost of Land \\ Today \end{tabular} \\ \hline a. & $46,000 & 3% & Annually & 3 years & \\ \hline b. & 46,000 & 5% & Annually & 3 years & \\ \hline c. & 46,000 & 7% & Annually & 3 years & \\ \hline \end{tabular}
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\begin{tabular}{|c|r|r|c|c|c|} \hline & \begin{tabular}{c} Payment \\ Amount \end{tabular} & \multicolumn{1}{c|}{\begin{tabular}{c} Interest \\ Rate \end{tabular}} & Compounding & Period Due & \begin{tabular}{c} Total Cost of Land \\ Today \end{tabular} \\ \hline a. & $46,000 & 3% & Annually & 3 years & \\ \hline b. & 46,000 & 5% & Annually & 3 years & \\ \hline c. & 46,000 & 7% & Annually & 3 years & \\ \hline \end{tabular}
