Homework Answers
When interest is compounded at 5% for 4 years, if firm sells the land for 200,000 and invest, the future value would be
Future value = P(1+i)n = 200,000 (1+0.05)4 = $ 243,101
This amount is more than what is being estimated as the worth of land at $ 240,000 in 4 years..
Hence, the firm should sell the land and invest at 5%
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