What is the maximum amount an investor should be willing to pay for a two-year $200 annuity, if the best alternative investment earns 20 percent per annum?
a. $305.56
b. $166.67
c. $138.89
d. $268.79
A
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Discounting allows comparisons of
a. money values and physical values. b. interest payments on borrowed funds and interest payments on loaned funds. c. money values received at different times. d. the quantities of outputs produced by different types of capital goods.
To say that people make marginal decisions means that
a. they usually wait until the last minute before making a decision to buy b. they weigh the additional costs and additional benefits of various activities before they make a decision c. most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence d. they consider the total cost and benefit of various activities before they make a purchase
When drawing a production possibilities frontier for two goods, all of the following are usually assumed except one. Which is the exception?
a. ?Technology is fixed. b. ?The production possibilities frontier is drawn for a particular time period. c. ?Resources can be shifted from the production of one good to the other. d. ?The quantity of resources is rapidly growing. e. ?Resources are fully and efficiently employed.
The average variable cost of producing 250 sundaes is $5. At this level of output, average variable cost is minimized. Which of the following statements is true?
A. Average fixed cost is minimized at an output less than 250 sundaes. B. Total cost of producing 250 sundaes is $1,250. C. Average total cost is minimized at an output greater than 250 sundaes. D. Marginal cost of the 251st sundae is $1,250.