An investment carrying a current cost of $120,000 is going to generate $50,000 of revenue for each of the next three years. To calculate the internal rate of return we need to:
A. find the interest rate at which the present value of $150,000 for three years from now equals $120,000.
B. find the interest rate at which the sum of the present values of $50,000 for each of the next three years equals $120,000.
C. calculate the present value of each of the $50,000 payments and multiply these and set this equal to $120,000.
D. subtract $120,000 from $150,000 and set this difference equal to the interest rate.
Answer: B
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Total surplus:
A. can never be zero.
B. can never fall below zero.
C. is always above zero.
D. is less than the consumer surplus.
The term ceteris paribus means that
a. everything is changing. b. all variables except those specified are constant. c. no one knows which variables will change and which will remain constant. d. the basic postulate of economics does not apply for the case being considered.
A monopolistically competitive firm is currently earning a positive economic profit. If other firms enter the market, we would expect that the added competition will cause this firm to adjust its output such that it
a. will operate closer to its efficient scale. b. will operate further from its efficient scale. c. will no longer be at its efficient scale. d. might move either closer to or further from its efficient scale.
Over the last 100 years or so, the U.S. economy has grown annually at an average rate of:
A. 1 %. B. 3 %. C. 4 %. D. 2 %.