A University of Iowa basketball standout is offered a choice of contracts by the New York Liberty. The first one gives her $100,000 one year from today and $100,000 two years from today. The second one gives her $132,000 one year from today and $66,000 two years from today. As her agent, you must compute the present value of each contract. Which of the following interest rates is the lowest one
at which the present value of the second contract exceeds that of the first?
a. 7 percent
b. 8 percent
c. 9 percent
d. 10 percent
a
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In a perfectly competitive market, producers efficiently use their scarce resources to produce what consumers want and as a result they achieve: a. productive efficiency
b. allocative efficiency. c. economic efficiency. d. constant returns of scale.
A new major league baseball expansion team is moving to your town. It will inject spending worth $40 million into your local economy initially. The Chamber of Commerce predicts that this will generate a total of $500 million in additional income for your town. The team owners think that this is an underestimate. What do you need to know to figure out who is right? Explain
The federal funds rate is determined by demand and supply of bank reserves.
a. true b. false
In macroeconomic analysis, a transfer payment is considered a
A. positive tax. B. fixed tax. C. negative tax. D. variable tax.