EBK PRINCIPLES OF ECONOMICS
8th Edition
ISBN: 8220103600453
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 27, Problem 2CQQ
To determine
Calculation of future value of money.
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Students have asked these similar questions
Hector puts $150 into an account when the interest rate is 4 percent. Later he checks his balance and finds he has about $168.73. How long did Hector wait to check his balance?
A. 3 years
B. 3.5 years
C. 4 years
D. 4.5 years
Which of the following has the highest future value?
A.
$100 saved for 2 years at 10 percent interest
B.
$130 saved for 2 years at 7 percent interest
C.
$120 saved for 2 years at 8 percent interest
D.
$110 saved for 2 years at 9 percent interest
In five years, you want to be able to buy a new car for $30,000. If the interest rate is 3 percent a year, what is the present value of this sum?
A.
$30,000.00
B.
$25,500.00
C.
$25,878.26
D.
$34,778.22
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- What is the present value of $100 paid two years from now when the interest rate is 10 percent? A. $100 B. $90.91 C. $82.64 D. $75.13arrow_forwardTo pay off your student loan, you must pay $10,000 at the end of the year for the next three years. The interest rate is 5 percent a year. What is the present value of these payments? A. $30,000.00 B. $27,232.48 C. $8,638.28 D. $29,100.00arrow_forwardAkhisha wanted to buy a cell phone which will have a price of P13,000 for 90 days from now due to the increase in prices of 12 percent simple interest. What is the present worth of a cell phone? a. P15,621 b. P12,621 c. P13,621 d. P14,621arrow_forward
- If the interest rate is 10 percent, the present value of an annual payment of $100,000 to be received indefinitely is: a. $976,463. b. infinite. c. $1,000,000. d. $2,000,000. e. $1,246,296.arrow_forwardCompounding refers to: Select one: a. the increased value of an investment that arises from the payment of periodic interest. b. the process of earning interest on both the interest and the principal of an investment. c. the paying back of both interest and principal during the life of a fixed-payment loan. d. the calculation of interest rates after the compounding effect of taxes has been allowed for.arrow_forward4arrow_forward
- 6. Alex invested a certain amount to a business and promised to pay him back with 1.8 times his original investment. They agreed to have it compounded monthly within 9 years. What is the nominal rate of interest r in percent?arrow_forwardAngela puts $1,000 in a savings account that pays 3 percent per year. What is the future value of her money one year from now? a. $970. b. $1,000. c. $1,003. d. $1,030.arrow_forward11. The face value of a bond is $10,000, and the annual coupon payment is $850. What is the coupon rate?arrow_forward
- 6) What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?arrow_forwarda) 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.arrow_forwardIf the interest rate is zero, then $100 to be paid in10 years has a present value that isa. less than $100.b. exactly $100.c. more than $100.d. indeterminatearrow_forward
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