An oil company has the opportunity to extract oil from a reserve in three years with a per barrel profit of $70 per barrel. The current market rate of interest is 4 percent. The present value of this future extraction is about:
A. $55
B. $62
C. $70
D. $72
B. $62
You might also like to view...
If the current account balance is -$100 billion, the capital and financial account balance is $80 billion, then the official settlements account balance is
A) $20 billion. B) $180 billion. C) -$20 billion. D) -$180 billion. E) 0.
Consider the two graphs above. Suppose producers forecast a decrease in sales. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
Suppose the capital gains tax is 28 percent and you purchased a house ten years ago for $80,000. If you sold the house today you would get $140,000. Your tax liability would be
A) $39,200. B) $16,800. C) indeterminate without knowing the inflation rate. D) indeterminate without knowing the personal income tax rate.
The basic purpose of economic models is to:
a. construct simplifying assumptions about the real world. b. explain reality in all its complexity. c. construct situations where controlled experiments can be carried out. d. provide explanations for, and predictions of the relationship between variables.