There are two periods. Peregrine consumes (£700, £880) and earns (£600, £990) in periods 1 and 2, respectively. If the interest rate is 0.10, the present value of his endowment is
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- A real estate company expects to earn $100M on a project they plan to invest in, if the company decides to invest a quarter of that sum now, how much will they have earned in 18 periods at a rate of 9%? O a. 118 million O b. 471 million О с. 100 million O d. 443 millionIf you want to withdraw $5000 in each year for the next 10 years when the interest rate is 40%, what is the approximate amount you need to invest now? O a. $11000 O b. $13000 O . $8500 O d. $16000Adam, a farmer, wants to buy a new equipment in three years from now. He expects that the price of the equipment will be $15000 in three years. Approximately. how much money should Adam put currently in his savings account if a bank pays 5% interest rate on that account? of Select one: O a. $12958 O b. $12465 O c. $19284 O d. $15928
- J Assume that at the beginning of the year, you purchase an investment for $14,200 that pays $95 annual income. Also assume the investment's value has increased to $15,800 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places. Rate of return b. Is the rate of return a positive or a negative number? O Positive O NegativeInterest 6% lonable fund is 4trillion. Suppose there was a change in the tax laws to encourage savers to save more and as a result, assume the equilibrium interest rate falls by 2 % point. By how much the equilibrium loanable funds saved and invested would rise or fall?An annuity is set up that will pay $1,700 per year for ten years. What is the present value (PV) of this annuity given that the discount rate is 6%? OA. $12,512 OB. $7,507 OC. $17,517 OD. $15,014 4
- Jacob manages a cloth manufacturing firm. He is deciding whether or not to invest In new machinery, The machinery costs $45,000 today and is expected to Increase cash lows in the first year by $25,000 and in the second year by $30,000. The firm's accrued fixed costs are $2800. If the interest rate (cost of capital) is 15% then whal is the net present value of the investment? 26.09 O 1840.09 2826.09 -576.56Suppose a bond pays $10 after the first year as coupon payment, and $10 plus the face value of $200 in the end of the second year. The two-year interest rates are 10% per year. What is the price of this bond now? O a. $200 O b. $221.45 Oc $220 O d. $182.64Suppose you net investment at time t (measured in years) is given (in pounds) by I(t) = 500 – 200 | x+1 Which of the following best represents the capital generated between the end of the 2nd year and the end of the 5th year? O a. a. £1361.37 O b. £1678.11 O c. £1544.03 O d. £1242.78
- You have heard about a new "green" light bulb that is costly to purchase but uses less electricity and thus allows you to save money on your utility bill. Suppose the new light bulb costs $10 today, but next year your electricity bill will be $50 lower. If the interest rate is 10%, what is the net present value of buying this new light bulb and using it for one year? O A. $40 B. -$45.45 OC. $55 OD. $35.45The present value of a fixed-payment loan is calculated as the, all cash flow payments. of the present value of Select one: O a. log b. sum c. multiple d. differenceAssume 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?