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Business, 03.03.2022 15:00 gomez36495983

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 $20,000 today and a maintenance fee of $550 per year starting next year. You expect to sell the time share in 10 years for $25,000 Alternatively you can just pay for the week vacation each year (starting next year). Each year will cost you $2,500. If your investments earn 5% per year (compounded annually) which alternative is cheaper and by how much in present value terms? a. Buy the time share it will save you $10,925
b. Pay each year it will save you $11,134
c. Pay each year it will save you $10,005
d. Buy the time share it will save you $10,405

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