Find the present value of the following income stream with a discount rate of 5%: One year from now Two years from now Three years from now Four years from now Amount received $200 $300 $400 $500 Enter your answer in dollars and cents (that is, with 2 decimal places).

Find the present value of the following income stream with a discount rate of 5%: One year from now Two years from now Three years from now Four years from now Amount received $200 $300 $400 $500 Enter your answer in dollars and cents (that is, with 2 decimal places).

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 13PAE

See similar textbooks

Related questions

Q: Google share price is $1759.73; Microsoft share price is $223.72; and Apple share price is 118.69.…

A: The P/E ratio is the price-to-earnings ratio. It is the ratio that denotes the amount of price to…

Q: pany deposits ₱200,000 into an account that earns a market interest rate of 11% per year at a time…

Q: Suppose that a salesperson has the following contract relating monthly sales, S, to her monthly pay,…

Q: Assume that the oil extraction company needs to extract Q units of oil (a depletable resource)…

A: P=20-0.2q MC=$ 3 Discount rate= 2%

Q: A coal-fired power plant can produce electricity at a variable cost of 4 cents per kilowatt hour…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Calculates the book profit or loss as well as the economic gain or loss in each of the following…

A: Answer - Need to find - Accounting profit & economic profit Given in the question - Revenue =…

Q: Which of the following is considered to be a method that firms can use to raise the financial…

A: The assets that are required by the company for providing services or goods being measured in terms…

Q: True or false justify your answer: Efficiency is a hypothetical concept with no practical value…

A: Efficiency has practical value. Answer is false Constraints reduce the risk and therefore considered…

Q: Calculates the book profit or loss as well as the economic gain or loss in each of the following…

A: Book profit is also known as the accounting profit which represents the financial value of the…

Q: Which of the following statements is most correct? The quickest way to determine whether the firm…

A: In an economy, when a firm operates its business, it maintains different types of records of all the…

Q: Assume you will get 20 rental payments paid over 20 years at the beginning of each year. Initially,…

A: Calculate the future payments

Q: MM’s Proposition I holds, minimizing the weighted average cost of capital (WACC) is the same as…

A: The firm exists in the market to maximize the profit. The short run objectives might be different…

Q: Which of the following is an acceptable reason for lowering the discount rate used to evaluate a…

A: find the answer below.

Q: Red Owl Stores told the Hoffman family that, upon the payment of approximately $518,000, a grocery…

A: ROS which is a grocery store would be held to its promises to the HM family according to the theory…

Q: 1) Economic Application of Integrals. Given the following marginal-revenue functions: a) R'(Q) = 28Q…

Q: If a family’s MPC is .7,then it is: Spending 70 percent of its income on consumer goods Saving 70…

A: Note- Since you have posted multiple independent questions in the same request, we will solve the…

Q: You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two…

A: GIVEN You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies.…

Q: Within its first three years, the 2012 Chevy Volt fell in value 62 percent to $12,997 in 2015. And…

A: Given data suggests that the EVs depreciate rather quickly and owing to steep decline in gasoline…

Q: h of the foll

A: Net Present Value is calculated by taking the difference between the present value of cash outflows…

Q: investors have learned that Richmond expects to earn free cash flows of $11 million each year in…

A: B) The PV of future cash flows from Richmond's investment = free cash flow till perpetuity/discount…

Q: A college student borrowed P20,000 from a bank for his tuition fee and promised to pay the amount…

A: Given: Initial amount=P 20000 New amount=P 19200 Interest= P 800

Q: Prepare a segmented income statement for Mike's Auto Center using the 2018 Actual results. Of the…

A: Mike Auto Car Segment Income Statement

Q: Calculates the book profit or loss as well as the economic gain or loss in each of the following…

A: Accounting profit evaluates the monetary costs that firms incur in production process and total…

Q: Using the following data, what would the transfer price per unit if Division A purchased Component X…

A: Cost based transfer pricing is one of the transfer pricing techniques where the cost of production…

Q: Calculates the book profit or loss as well as the economic gain or loss in each of the following…

A: Revenue = $110million Explicit costs = $80 million Implied costs = $50 million

Q: Which of the following conditions must hold true for the constant growth valuation formula to be…

A: The constant growth model is also known as the Gordon Growth Model. It is used to value the stocks.…

Q: n order to create an endowment, which pays $100,000 per year, forever, how much must be set aside…

A: Given the information: Annual payment = $100000 Interest rate = 10%

Q: The Public Service Company of the Southwest is regulated by an elected state utility commission. The…

A: Given information: Total assets = $500,000 Demand function: P = 250 - 0.15Q Total cost function: TC…

Q: You have recently learned that the company where you work is being sold for $500,000. The company's…

A: Opportunity cost can be defined as the benefit that has been forgone of the next best alternative…

Q: A bank has two types of branches. A satellite branch employs 3 people, requires $400,000 to…

A: "Since you have posted a question with multiple sub-parts ,we will solve first three subparts for…

Q: Which of the following describes accounting profits? Depreciation of fixed and variable assets…

A: According to the guidelines we can only solve Part 1 for you. If you want answers to other…

Q: Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that…

A: A market is a place where the buyers and the sellers interact with each other and the exchange of…

Q: Suppose the joint cost function of a firm producing two products X and Y is given by C = 250X2 +…

A: The problem can be written as : Minimize: 250X2+120Y2Subject to: X+Y=1480 The Lagrangian will look…

Q: Identify whether each of the following costs of Granite Construction, Inc., would be classified as…

A: 1)Hourly wages paid to backbone operators Direct labor 2)Crankcase oil used in direct machinery…

Q: Find the marginal efficiency of the capital when the prospective yield is 6036 and the supply price…

A: As the question, Prospective yield = 6036 Supply price is valued as = 70 Marginal Efficiency of the…

Q: Assume r = 0.1 is the present real interest rate and this rate is expected to prevail for the next 2…

Q: Consider a company that can invest capital to generate revenue and assume that the marginal revenue…

A: Given; MR1=2.25MR2=1.75MR3=1.40MR4=1.24MR5=1.17 Interest rate= 20%

Q: Treasury bill with a par value of $5000 sold at $4,750. After six months the discount on this…

A: Introduction Treasuring bill are short term instruments. They are issued by government of any…

Q: A developer of high-priced executive tract homes has offered you $1000 per acre for the 500 acres of…

A: GIVEN A developer of high-priced executive tract homes has offered you $1000 per acre for the 500…

Q: orrowed money from a bank. He receives P18T & promised to pay P20T at the end of 6 months. What is…

A: Present received amount = 18 T Payment to be made = 20 T Payment made at the end of 6 months

Q: U and L are two firms with the same EBIT of $100,000. They are identical in every respect except…

A: Company L U EBIT 1,00,000 1,00,000 Debt (D) 500,000 Nil Ke 12% 8% Kd 5% Nil

Q: You are the manager of a firm. You are given a task to decide which of three options to take to…

A: Option Year1 (RM) Year2 (RM) Year3 (RM) A 70000 80000 90000 B 50000 90000 100000 C 30000…

Q: Normal profit is a term for explicit profit the competitive rate of return the accounting profit…

A: In a market, profit refers to the difference between firm's total revenue and total cost that is…

Q: Coupon rate is used to calculate the coupon payment, and YTM is a discount rate, which will make the…

A: Disclaimer :- as you posted multiple questions we are supposed to solve only the first one. The…

Q: Identify the term being referred to: A share repurchasing method wherein the issuing entity…

A: Company issues share to raise fund from the stock market and buyers of shares are called…

Question

Find the present value of the following income stream with a discount rate of 5%:

	One year from now	Two years from now	Three years from now	Four years from now
Amount received	$200	$300	$400	$500

One year

from now

Two years

from now

Three years

from now

Four years

from now

Amount received

$200

$300

$400

$500

Enter your answer in dollars and cents (that is, with 2 decimal places).

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

2. [For this question, the unit used is in thousands of Rupiah].Rihana's preferences for consumption (C) and leisure (L) are explained by the utility function:U(C, L) = (C - 200) (L - 56) so the marginal rate of substitution is MRS = (L - 56)/(C - 200) If Rihana has 168 hours to devote her time to work or leisure per week and she receives Rp. 240 of the pension fund per week, how much is Rihana's reservation fee? (A). Rp. 0(B). Rp. 2.80(C). Rp. 5.00(D). Rp. 6,25(E). Minimum wage rate. Choose one of the answers from the five choices provided. And please, also provide a brief description, explanation or argument for your choice. Thank you Bartleby!
Suppose your rich relative promises you the choice between $20,000 today and a delayed graduation gift of a $45,000 in four years time. Assume that the interest rate is 5 per cent. *Compare the present discounted value of the delayed gift versus the immediate gift. *What is the interest rate that would equalize the present discounted value ofthe two gifts? What happens as interest rates become higher than this value?
ran Lee plans to set aside $2,600 a year for the next seven years, earning 3 percent. What would be the future value of this savings amount? Use Exhibit 1-B. (Round your discount factor to 3 decimal places and final answer to 2 decimal places.)
Suppose you purchase a new house for $200 000, making a down payment of 5% and takingout a mortgage on the balance. What is the return on your investment in your house if one yearlater the price of your house increased by 10%? (show your work).A) 100%B) 150%C) 200%D) 220%
The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate?
The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate? d) Suppose that the bond trades at premium. Is there excess demand or supply? Explain.e) There is a business cycle expansion, so both supply and demand shifts. After the shift, thenew demand curve is given by: D = 4000 + X − 2P, whereas the new supply curve is S =2P + 200. For which values of X will the interest increase/decrease? Which values of X arein line with empirical data?
10. What is the present value of a perpetuity of $100 if the appropriate discount rate is 7%? If interest rates in general were to double and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity?
If Peregrine consumes(1,500,880)and earns(1,300,1,100)and if the interest rate is10%, the present value of his endowment is
APPLIED ECONOMICS Topic: Intertemporal Choice Levinn’s utility function is expressed as the following: U= C1 C2 0.3 where C1 is his first periodconsumption and C2 is his second period consumption. His income in the first period is$2500 and interest rate is at 10%. If at equilibrium, Levinn is neither a borrower nor a lender,then what is his expected income in the second period? Show the graph if possible
The interest rate is 6 percent a year and you expect to receive $1,000 next year and the following year. What is the present value of $1,000 to be received next year? What is the present value of $1,000 tobe received in two years? The present value of $1,000 to be received next year is $ ____. >>>>Answer to 2 decimal places.
Suppose Carl’s wage-schooling locus is given byYears of Schooling Earnings 9 $18,500 10 $20,350 11 $22,000 12 $23,100 13 $23,900 14 $24,000Derive the marginal rate of return schedule. When will Carl quit school if his discount rate is 4 percent? What if the discount rate is 12 percent?
Elroy Harris is considering whether to buy a corn and soybean farm in Iowa. The farm will cost $800,000, and Xander will be able to pay this from profits his recently deceased mother made on the stock market and willed to him. He estimates that if he does not run the farm, and keeps his current job as an economic forecaster, he will be able to earn $40,000 a year. The prevailing interest rate is 9 percent. Xander’s only motive is to maximize his income. His accountant tells him the annual profit from the farm is likely to be depending on certain conditions and assuptions: Scenario i) $160,000 of accounting profit Scenario ii) $100,000 of accounting profit Scenario iii) $50,000 of accounting profit Using the concept of positive economic profit, which of the three scenarios would the economic opportunity cost justify him taking up farming and quitting his job as an economic forecast. Show your work and calculations