Suppose Carlos has a 60 percent chance of not collecting $100,000 when his rich uncle dies in 10 years. Juanita wants to buy the rights to this possible inheritance from Carlos. How much is the possible inheritance currently worth to Carlos? Assume the interest rate is 9 percent.
A. $25,345.
B. $142,042.
C. $94,695.
D. $16,896.
Answer: D
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Consider a perfectly competitive firm with MC = 10 + q. If market demand is Q = 100 - P and the current industry output is 80 units, then the firm will produce
a. zero units. b. 10 units. c. 20 units. d. the answer cannot be determined without knowing what the supply curve is.
In the figure above, assuming that the firm does not shut down, it will charge a price of
A) $1. B) $2. C) $3. D) $4.
Zero inflation
a. might be dangerous because it could lead to rapidly increasing prices. b. would limit the flexibility of the labor market and so could at times raise unemployment. c. would make it easy for the Central bank to create negative real interest rates. d. is impossible to achieve in the real world.
Nonexcludability causes:
A. firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good. B. people to demand a higher quantity than they would if they had to pay for what they consumed. C. people to demand a lower quantity than they would if they paid for what they consumed. D. firms to supply a higher quantity than they would if they had to pay for what they supplied.