Corrosion Resistant Tower

Question 1

 

• 10 years ago, John opened a savings account with the Citizens Bank by depositing $10,000. The account pays 5% simple interest. 5 years after his first deposit, he made another deposit of $5,000. What will be the total amount in the account 5 years from now?
• Elizabeth wishes to buy a $200,000 house in Lexington, KY. She can afford monthly payments up to $1,100. Thirty-year loans are available at 4% interest compounded monthly. If she can make a $20,000 down payment, can she afford to purchase the house?

Question 2

 

• An investment of $5000 in an Infotech common stock proved to be very profitable. At the end of 3 years the stock was sold for $30,000. What was the rate of return on investment?
• Horizon Wireless must rebuild a cell tower recently destroyed by a tornado. If made of normal steel, the tower will cost $40,000 to construct and should last 18 years. Maintenance will cost $1,000 per year. If corrosion resistant steel is used, the tower will cost $50,000 to build and the annual maintenance cost will be reduced to $200 per year. Determine the IRR of building the corrosion resistant tower. If Horizon requires a return of 10% on its capital projects, which tower should they build?

Question 3

Let talk Game theory. Do you see it at working your personal life?

How about our government and business structures?

Is game theory at work?

DO you believe that humans only act in their own self-interest?