Calculate the net present value of marian''s investment

Reference no: EM131335548

Marian currently makes $40,000 a year as a librarian. She is considering a career change: For a current expenditure of $30,000, she can obtain her florist's license and become a flower arranger. If she makes that career change, her earnings will rise to $48,000 per year. Marian has five years left to work before retirement (you may safely assume that she gets paid once at the end of each year).

a. Calculate the net present value of Marian's investment in floriculture if interest rates are 10%.

b. Assume that in terms of job satisfaction, floriculture and librarianship are identical. Should Marian change careers?

c. Compare the present value of Marian's earnings as a librarian to the present value of Marian's earnings as a florist. Is the difference large enough to justify spending $30,000?

d. Does the method you used in part (a) give an identical answer to the method you used in part (c)? Explain.

Reference no: EM131335548

Questions Cloud

Write a response about the given post : Which courses were your favorites? Discuss your reasons for choosing these particular courses.What is the main piece of knowledge you gained from each course?How could you apply this to your career goals in your concentration?

Define entrepreneurship and cite your definition : Define entrepreneurship, and cite your definition - Explain how entrepreneurs are likely to face extreme situations while working on their ventures.250 words

What is the dylan groups consolidated taxable income : The Dylan consolidated group reports the following results for the 2016 tax year: What is the Dylan Group's consolidated taxable income and consolidated tax liability for 2016?

Untilmaturity pays a coupon rate : A bond with a face value of $1000 and 15 years remaining untilmaturity pays a coupon rate of 10% semi-annually. Calculate its yield to maturity if it is priced at $1100.

Calculate the net present value of marian''s investment : Compare the present value of Marian's earnings as a librarian to the present value of Marian's earnings as a florist. Is the difference large enough to justify spending $30,000?

Analyze the current irs rules related to capital gains : Next, analyze the current IRS rules related to capital gains and losses on the sale of investment property. Based on your analysis, take a position as to whether you believe the current rules are fair to individual taxpayers.

Find the purchase price if the bondis redeemable : A $500, 8% bond is purchased on February 1, 2004, to yield 10%compounded semi-annually. The interest on the bond is payable onFebruary 1 and August 1 each year. Find the purchase price if the bondis redeemable at face value on February 1, 2014.

Write about unfair treatment : You need to write about unfair treatment. The final research paper because of the changeable writing styles and the progress on the grammar

What is the outstanding principal after the 12 payment : A debt of $25,000 is to be amortized by making payments of $1500 atthe end of each month. The interest rate is 12% compounded monthly. a. What is the outstanding principal after the 12th payment?

User Account

All Pages