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 returnon the students' investment projects:StudentAlexClancyEileenReturn(Percent)47StudentAlexClancyEileen15Assume 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(Dollars)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 lender in this market if his or her expected rate of return isthan r. Suppose the interest rate is 6 percent.Among these three students, the quantity of loanable funds supplied would be $Now suppose the interest rate is 12 percent.Among these three students, the quantity of loanable funds supplied would be $At an interest rate ofSuppose the interest rate is at equilibrium rate.StudentAlexClancyEileenMoney a Year Later(Dollars)Complete the following table with how much each student will have a year later after the investment projects pay their return and loans have beenrepaid.True or False: Both borrowers and lenders are made better off.TrueI% the loanable funds market among these three students would be in equilibrium. At this interest rate,would want to borrow, andwould want to lend.O Falseand quantity demanded would be $and quantity demanded would be $

Formula for future value is given as: F = P(1+R)t F: Future value P : present valueR : per annum…

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) Alex 4 Clancy 7 Eileen 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. (Dollars) T Student Alex Clancy Eileen Money a Year Later 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 lender in this market if his or her expected rate of return is than r.

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) Alex 4 Clancy 7 Eileen 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. (Dollars) T Student Alex Clancy Eileen Money a Year Later 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 lender in this market if his or her expected rate of return is than r.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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