A home seller was offered $320,000: $140,000 cash plus zero-coupon bonds paying $180,000 after 20 years....
A home seller was offered $320,000: $140,000 cash plus zero-coupon bonds paying $180,000 after 20 years. If the discount rate is 10%, what is the buyer’s actual cost of the property?
Homework Answers
Actual cost = initial cost+present value of the zero coupon bonds
Present value = 180000/(1+0.10)^20 = 180000/7.727499 = 23293.4356
Actual cost of the property = 140000+23293.4356 = 163293.44
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A home seller was offered $320,000: $140,000 cash plus
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