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Complete the following table with how much each student will have a year later when the project pays its return. Money a Year Later Student (Dollars) Antonio Dmitri Frances

Complete the following table with how much each student will have a year later when the project pays its return. Money a Year Later Student (Dollars) Antonio Dmitri Frances

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students' investment projects: Return Student (Percent) Antonio 4 Dmitri Frances 15 Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project. Complete the following table with how much each student will have a year later when the project pays its return. Money a Year Later Student (Dollars) Antonio Dmitri Frances
Transcribed Image Text:Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students' investment projects: Return Student (Percent) Antonio 4 Dmitri Frances 15 Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project. Complete the following table with how much each student will have a year later when the project pays its return. Money a Year Later Student (Dollars) Antonio Dmitri Frances
Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r. A student would choose to be a borrower in this market if his or her expected rate of return is v than r. Suppose the interest rate is 6 percent. Among these three students, the quantity of loanable funds supplied would be s , and quantity demanded would be $ 1. Now suppose the interest rate is 12 percent. Among these three students, the quantity of loanable funds supplied would be s , and quantity demanded would be $ 1. At an interest rate of %, the loanable funds market among these three students would be in equilibrium. At this interest rate, v would want to borrow, and v would want to lend. Suppose the interest rate is at the equilibrium rate. Complete the following table with how much each student will have a year later after the investment projects pay their return and loans have been repaid. Money a Year Later Student (Dollars) Antonio Dmitri Frances True or False: Both borrowers and lenders are made better off.
Transcribed Image Text:Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r. A student would choose to be a borrower in this market if his or her expected rate of return is v than r. Suppose the interest rate is 6 percent. Among these three students, the quantity of loanable funds supplied would be s , and quantity demanded would be $ 1. Now suppose the interest rate is 12 percent. Among these three students, the quantity of loanable funds supplied would be s , and quantity demanded would be $ 1. At an interest rate of %, the loanable funds market among these three students would be in equilibrium. At this interest rate, v would want to borrow, and v would want to lend. Suppose the interest rate is at the equilibrium rate. Complete the following table with how much each student will have a year later after the investment projects pay their return and loans have been repaid. Money a Year Later Student (Dollars) Antonio Dmitri Frances True or False: Both borrowers and lenders are made better off.
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