Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you have 100,000$ saving that is very important fo

You have 100,000$ saving that is very important for you. You want to invest it...

60.1K

Verified Solution

Question

Finance

You have 100,000$ saving that is very important for you. You want to invest it for the next two years. You dont know if it is better to invest in stock or buy a home. If you invest in stock, for the first year there is 40% chance you earn 20% and 60% chance that you lose 5% . For the second year there is 30% chance of 30% increase and 70% chance of 10% increase in the market. If you buy a home, for the first year, the value of your home will go up 5% by the chance of 20% and it may go down 10% by chance of 80%. For the second year, there is 50% chance that the value of home goes up 15% and 50% chance that the home prices go down 20%. (Hint: assume we took care of all the costs related to home in the value calculation) Use the NPV methodology to see which option is better for you for the next two years? The discount factor is 1%.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Read the text and answer the question that follows. Human beings can hear sound frequencies...

Physics
1.2K views

A block of mass m1 = 1.60 kg initially moving to the right with a speed...

Mechanical Engineering
1.2K views

A generous amount of gel is applied to the surface of the window of an ultrasound...

Physics
1.2K views

3 A piece of metal has a cutoff wavelength of Acutoff 450 mm Consider illuminating...

Physics
1.2K views

A block of mass m is attached to two unstretched springs of spring constants k...

Algebra
1.2K views

2 Using the inner product on R2 generated by matrix A 3 find u v...

Algebra
1.2K views

8 00 for adults On the first day 2350 people enter the concert and 12400...

Accounting
1.2K views

how does an installment note differ from a note for which the principal is paid...

Accounting
1.2K views

Billies Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for...

Accounting
1.2K views

Crane Company produces flash drives for computers, which it sells for $22 each. Each flash...

Accounting
1.2K views

Use the FASB Accounting Standards Codification to complete the table. I specifically need help with...

Finance
1.2K views

A share of stock has a dividend that is expected to grow at a constant...