Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
i) Find the present value of an asset which will pay you a single cash flow of RM13,000
at time ? = 10.
ii) Rank the following in terms of ascending order. (i.e. lowest to highest):
?,?^??, ?,?^?,?^?,?^?
b) Hanie Najwa needs to borrow RM5,000 for one year.
• Option A: She is offered a loan at an effective annual rate of 5%
• Option B: She is offered a loan of RM10,000 at a lower effective annual rate of interest denoted by ?. If she borrows of RM10,000, she can invest the excess RM5,000 for one year at 3%. How low must the rate on the RM10,000 loan (Option B) be in order for Hanie Najwa to prefer it to the RM5,000 loan (Option A)?
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