Suppose you have two clients who need your services for two years. One agreed to pay you $50,000 one year from now and another $50,000 in two years while the other paid $35,000 after one year, but $65,000 after two years
Assuming an interest rate of 10%, which one has a higher present value? Round off to the nearest dollar.
The present value of the first contract is $86,777 and the second one is $85,537.
You might also like to view...
Use the Cobb-Douglas production function to show that a one-unit increase in the labor input will reduce the marginal product of labor and increase the marginal product of capital. Explain each of these results
What will be an ideal response?
The competitive labor market model suggests that the persistence of significant employer discrimination requires the owners of the firm to
A. engage in collusion. B. hire a quantity of labor in which VMPL exceeds the wage rate. C. supply capital at a rate of return below what could be earned elsewhere. D. supply capital at a rate of return higher than what they could earn by investing their money elsewhere.
Which of the following sets of economic data is minimizing the cost of producing a given level of output?
A. MPL = 20, MPK = 40, w = $32, r = $16. B. MPL = 40, MPK = 40, w = $16, r = $32. C. MPL = 40, MPK = 20, w = $16, r = $32. D. MPL = 20, MPK = 40, w = $16, r = $32.
Company A has just discovered that the marginal revenue product generated by the last worker hired was $80 while the marginal factor cost was $90. What should Company A do?
A) Leave the level of production unchanged. B) Increase the amount produced. C) Reduce the amount produced. D) Collect more information before making a decision.