Assume an interest rate of 5%. What is the maximum amount an individual would be willing to give up today in exchange for $1, paid 30 years in the future?

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.7P
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-Assume an interest rate of 5%. What is the maximum amount an individual would be willing to give up today in exchange for $1, paid 30 years in the future?

-Suppose the government has promised to pay $100 billion dollars in benefits 10 years from now.  Assuming an interest rate of 4%, what is the present discounted value (PDV) of the obligation?  Answer in billions of dollars, rounded to two decimal places.

 

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