Suppose Emilio offers you $500 today or $X in 10 years. If the interest rate is 6 percent, then at what value of X would you be indifferent between the two options?
a. X = 809.33
b. X = 855.56
c. X = 895.42
d. X = 916.74
c
You might also like to view...
Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will
A) spend all $30 on tea. B) spend all $30 on coffee. C) spend $20 on coffee and $10 on tea. D) be indifferent between any bundle of coffee and tea costing $30.
Refer to the above figure. A movement from Point A to Point B is caused by
A) an increase in income. B) an expectation of a decrease in the price of the good in that figure. C) a decrease in the price of the good in that figure. D) all of the above.
If unskilled labor and capital are substitutes,
A. the price of unskilled labor decreases when the price of capital increases. B. the cross-elasticity between unskilled labor and capital is positive. C. the demand for unskilled labor increases when the price of capital decreases. D. the demand curve for capital is upward sloping. E. the price of capital is increasing.
The most economically efficient exchange rate system is one in which
A) residents of a nation can reallocate their resources at minimal costs. B) the central bank in a nation requires the least intervention in domestic money markets. C) the central bank in a nation requires the least intervention in foreign exchange markets. D) real income fluctuations are minimized.