The maximum amount an individual can contribute to her Registered Retirement Savings Plan (RRSP) for a year is set by the Canada Revenue Agency. For the year 2011, the maximum contribution was the lesser of $21450 or 18% of the individual's "earned income" in 2010. The lowest amount of earned income for 2010 at which an individual could make a $21450 contribution in 2011 is $ Do not round your answer! Input the whole number part only, e.g., if the answer is 2566.65 input 2566. Do not include a $ sign, commas, or spaces in the answer.
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- Your grandparents decide they would like to put aside money to help support each of their grandchildren's educations. Assume that they would like to give each of their grandchildren $18000; that the money will be given when each grandchild turns 18; and that the money is in an account that earns 4.9%. They would like to know how much money they would need to set aside each time one of their grandchildren is born to be able to make this possible. How would your grandparents solve for P? $18000(F|P, 4.9%,18) O $18000(P|F, 4.9%,18) NeitherSally will eam S33,000 this year and $42,000 next year. The real interest rate is 25% between this year and next year; she can borrow or save at this rate. She has no wealth at the start of this year and plans to finish next year having consumed everything she possibly can. She would like to consume the same amount this year as next year. How much should Sally save (or borrow) this year? save $4500 O save $4000 O borrow $4500 O borrow $4000Why was it so easy for non-credit worthy people to qualify for a mortgage loan, either a new loan or a refinancing of a previous loan, in the 1990s and early 2000s? O Banks were obligated to lend money to low-income people as mandated by the Community Reinvestment Act of 1977 and 1999. O In 2004 the Housing and Urban Development Agency (HUD) of the federal government mandated that Fannie Mae and Freddie Mac purchase X amount of sub-prime loans from banks. O The deregulation policies of the 1990s gave many financial firms a free hand in dealing with mortgage buyers. O All of the above.
- Assume that an individual expects to work for 40 years andthen retire with a life expectancy of an additional 20 years.Suppose also that the individual’s earnings increase at a rateof 3 percent per year and that the interest rate is also 3 percent(the overall price level is constant in this problem). What(constant) fraction of income must the individual save ineach working year to be able to finance a level of retirementincome equal to 60 percent of earnings in the year just priorto retirement?Abby lives and works for two periods. In the first period, she earns 1,000 coconuts while inthe second she earns 2,200 coconuts. Abby can save or borrow from a bank at the same interestrate of 10%. Abby also owns a 550 sq.ft. apartment, priced at 2 coconuts per square foot. Shecannot sell it in the first period because she needs a place to stay in the second, but she canborrow against it and sell it in the second.a. In a graph that has future consumption on the vertical axis and current consumption onthe horizontal, show how her lifetime budget constraint would look if banks do NOT requirecollateral. Make sure to compute and show the coordinates of the vertical and horizontalintercepts as well as those of the endowment point (which in the second period shouldinclude her house).b. Suppose that Abby likes to consume 2,400 coconuts in the first period. Could she do thatif banks do not require collateral? Would the outcome be Pareto optimal and why?c. Suppose now that banks do require…Brian lives in San Diego and runs a business that sells guitars. In an average year, he receives $733,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $433,000; he also pays wages and utility bills totaling $257,000. He ovwns his showroom; if he chooses to rent it out, he vill receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this guitar business, he can vork as a paralegal, receive an annual salary of $23,000 vith no additional monetary costs, and rent out his showroom at the $13,000 per year rate. No other costs are incurred in running this guitar business. Identify each of Brian's costs in the following table as either an implicit cost or an explicit cost of selling guitars. Implicit Cost Explicit Cost The vholesale cost for the guitars that Brian pays the manufacturer The salary Brian could earn if he worked as a paralegal The vages and utility…
- Exercise 2.3 at pg24: Say you barrowed $10,000 from a bank at 12% interest rate per year for aperiod of 10 years. How much will you have to pay back after 10 years, ifa. The bank charged you simple interest? b. The bank charged you compound interest?ces The following table shows Uma's estimated annual benefits of holding different amounts of money: Total benefit Extra benefit Average money holdings ($) ($) ($) 135 147 500 600 700 800 900 1,000 1,100 1,200 157 165 171 175 177 177 12 10 8 C 4 2 0 Find the extra benefit of each additional $100 in money holdings and complete the table above. Comparing the benefit with the opportunity cost, in terms of forgone interest, how much money will Uma hold on average if the nominal interest rate is 10 percent? 6 percent? 4 percent? Instructions: Assume that Uma wants her money holding to be in a multiple of $100. Uma's average money holdings at: 10 percent: $ 6 percent: $ 4 percent: $Suppose that you earn $320 in year 1 and will ean $720 in year 2. If you borrow money against your future income you will have and additional $576 to spend in year 1, and if you lend all of your current income you will have and additional $400 to spend in year 2. In both years you consume only food which costs $1 per kilogram in each year. What is the interest rate that you borrow and lend at? R= Let your MRS for food in year 1 with food in year 2 be given by the formula where F is the amount of food consumed this year and F is the amount of food consumed next year. Calculate your consumption bundle: F = F = Suppose the interest rate at which you can borrow and lend changes to 20%. Calculate your new consumption bundle: F = F2 = Which interest rate is preferred? The initial interest rate found in part 1 O The new interest rate, 20%
- a) Suppose you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent. What is the future value of the $350 after 4 years? b) Suppose you are deciding whether to buy a particular bond from your local municipality. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. Assume the interest rateis6percent. Underwhatcircumstanceswillyoubuythebond?Meaninguptowhatpriceareyou willing to pay.As a percentage, $9.00 is equal to _____ of $20.00.?ework (CIT 25) This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. (?) S INTEREST RATE F2 F3 11 F4 d F5 COL F6 % 。。。。 O F7 A F8 & & F9 * F10 F11 ) F12 2 Fn Lock D Insert Prt Sc + X 1:44 PM 4/29/2022 (2 D Ba