$250 $250 $250 $200 $150 $100 2 10% yr 4 5 O a. P= 100(P|A 10%,6) + 50(P|IG 10%,3) + 150(P|A 10%,3)(P|F 10%,3) Ob. P = 100(P|A 10%,3) + 50(PIG 10%,3) + 250(P|A 10%,3)(P|F 10%,3) Oc. P= 250(P|A 10%,6) – 50(P|IG 10%,3) Od. P = 100(P|A 10%,4) + 50(P|G 10%,4) + 250(P|A 10%,2)(P|F 10%,4)

$250 $250 $250 $200 $150 $100 2 10% yr 4 5 O a. P= 100(P|A 10%,6) + 50(P|IG 10%,3) + 150(P|A 10%,3)(P|F 10%,3) Ob. P = 100(P|A 10%,3) + 50(PIG 10%,3) + 250(P|A 10%,3)(P|F 10%,3) Oc. P= 250(P|A 10%,6) – 50(P|IG 10%,3) Od. P = 100(P|A 10%,4) + 50(P|G 10%,4) + 250(P|A 10%,2)(P|F 10%,4)

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter20: The Problem Of Adverse Selection Moral Hazard

Section: Chapter Questions

Problem 3MC

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Question

Consider the following cash flow diagram. Which of the expressions is not valid for the present worth?

$250 $250 $250
$200
$150
$100
2
10% yr
4
5
O a. P= 100(P|A 10%,6) + 50(P|IG 10%,3) + 150(P|A 10%,3)(P|F 10%,3)
Ob. P = 100(P|A 10%,3) + 50(PIG 10%,3) + 250(P|A 10%,3)(P|F 10%,3)
Oc. P= 250(P|A 10%,6) – 50(P|IG 10%,3)
Od. P = 100(P|A 10%,4) + 50(P|G 10%,4) + 250(P|A 10%,2)(P|F 10%,4)

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