Econ Micro (book Only)
Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 13, Problem 9P
To determine

Identify the present value of an income stream

Concept Introduction:

Interest rate: The rate charged per period for borrowed money, deposited or lend expressed as a percentage of principal

Present value of an income stream: The current value of a future sum of money or stream of cash flows at a given specified rate of return

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QUESTION 1 Muhammad takes out a loan of $ 4,324, at 8% simple interest, for 9 years. How much will he pay back at the end of year 9? QUESTION 2 Calculate the amount of interest on an investment of AED 149,956 at 8% simple interest for 7 years.
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H6. a. what is the present value of a two year income stream $10,000 in year 1 and $10,000 in year 2 assuming a 5% interest rate (assuming one gets paid at the end of the year) b. what is the present value of a $10,000 income stream obtained in every throughout one's life?
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