The profit-maximizing manager of Big Farms wants to purchase a large piece of farm equipment. The manager has two financing options from two different banks. Big Bank will allow the manager to make five equal payments of $22,000 at the end of each of the next five years. Best Bank will allow the manager to make a payment of $10,000 at the end of the next four years and then make a balloon payment
of $72,000 at the end of the fifth year. If the interest rate is 4 percent, which of the following statements is true?
A) The manager of Big Farms should select Big Bank's offer because the total repayment is less than the total repayment at Best Bank.
B) The manager of Big Farms should select Big Bank's offer as the present value of the payment plan is $97,939.60, which is lower than the payment plan offered by Best Bank.
C) The manager of Big Farms should select Best Bank's offer as the present value of the payment plan is $95,477.75, which is lower than the payment plan offered by Big Bank.
D) The present value of the two payment plans is exactly the same, so the manager of Big Farms is indifferent between the two payment plans.
C) The manager of Big Farms should select Best Bank's offer as the present value of the payment plan is $95,477.75, which is lower than the payment plan offered by Big Bank.
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Refer to the figure above. If the government fixes a minimum wage rate at $25, the unemployment in the market will be:
A) 10 units of labor. B) 20 units of labor. C) 30 units of labor. D) 0 unit of labor.
Which of the following is an example of the command approach to regulation?
a. The sale of tradable permits to emit sulfur dioxide in the Chicago Mercantile Exchange b. Enforcing private property rights and private ownership of elephants in Africa c. Zoning in many areas that restricts the types of buildings that can be built d. The government providing subsidies for public education e. A Pigouvian tax
Short-run movements in nominal exchange rates are primarily due to:
A. inflation differentials. B. changing prices of goods and services in the countries involved. C. changing expected rates of return on domestic and foreign assets. D. changes in exports.
PriceQuantity Demanded$01,000$1400$2200$3100$425 Refer to the table, which shows the number of MP3 downloads demanded per month for the students at a certain university. Does this demand schedule conform to the law of demand?
A. Yes, because as the price falls, the quantity demanded also falls. B. No, because the demand for most goods does not follow the law of demand. C. Yes, because as the price falls, the quantity demanded rises. D. No, because there appears to be no relationship between price and quantity demanded.