Suppose the interest rate is 8 percent. Consider three payment options. 1 . $300 today. 2 . $330 one year from today. 3 . $360 two years from today. Which of the following is correct?
a. 1 has the highest present value and 2 has the lowest.
b. 2 has the highest present value and 3 has the lowest.
c. 3 has the highest present value and 1 has the lowest.
d. None of the above is correct.
c
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The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal cost of the last gallon of milk produced is
A) $3.00 a gallon. B) $3.50 a gallon. C) $4.00 a gallon. D) $4.50 a gallon.
A perfectly competitive firm that should not shut down in the short run will maximize profit where
a. VC = 0 b. FC = 0 c. AFC = MC d. P = MC e. ATC = 0
Under adaptive expectations theory, people expect the rate of inflation this year to be:
a. zero, regardless of the rate last year. b. the same as last year. c. the rate based on predictable and fiscal policies. d. All of these.
The equilibrium price of a good in market A is $24. The current price of the good in market A is $21. At this price, a(n) ________________________ of the good exists in market A
A) surplus B) shortage C) excess supply D) excess demand E) b and d