EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 16, Problem 4P
To determine
Future value and interest payments.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The table below shows the expected rate of return and the demand for ovens.
Ovens
1
Expected Rate of Return (%)
14
2
3
4
5
10
8
6
4
Suppose the interest rate offered by the bank is 8%. How many ovens will be demanded?
w
Multiple Choice
O
four ovens
five ovens
O
one oven
O
three ovens
!
1
@
2
# 3
Saved
50
$
%
&
Λ
LO
7
8
The Atlantic Investment Tax Credit is a 10% tax credit
available to businesses that make specific investments in
the Atlantic region and the Gaspe Peninsula. The graph
shows the market for loanable funds.
Show the impact of this tax credit by moving the proper
curve appropriately in the graph.
The new equilibrium interest rate is
The quantity of loanable funds is $
1
Incorrect
5
Incorrect
I
billion
Which statement accurately describes the impact of
the Atlantic Investment Tax Credit?
%
Firms find that more investments are profitable and
increase their demand for loanable funds. As a
result, the interest rate rises.
Interest rate (%)
10
10
3
2
0
0
5
10 15 20 25 30 35
Quantity of loanable funds (in billions)
40
Supply
45
Demand
50
QUESTION 19
You lend your sister's daughter $2,000 for a year, if at the end of the year she pays you $2,180. The interest rate you are charging her is
O 1.1%.
O 9%.
O 10%.
O 20%.
Chapter 16 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- 5. Suppose after you graduate from Algoma University, you find a job that pays you $75,000 a year. Further suppose that you take out a home equity loan of $360,000 for 30 years at an annual interest rate of 3.5 percent, with payments to be made monthly. What will your monthly payments be? If the interest rate increases from 3.5 percent to 5.0 percent, how much will your monthly payments increase? Instead of 30 years, you decide to pay your loan in 25 years, what will your monthly payments be if the interest rate remains at 3.5 percent or increases to 5.0 percent. Develop a chart comparing these monthly payments. Show your work.arrow_forwardWhat is the present value of a payment of $5,000 at the end of one year and a second payment of $7,000 at the end of two years if the interest rate is 5 percent? O A. $11,201.84 O B. $11,111.11 O C. $10,985.14 O D. $12,250.32arrow_forward5. LO 2,5 A consumer receives income y in the current period and income y' in the future period, and pays taxes of t and t' in the current and future periods, respectively. The consumer can borrow and lend at the real interest rate r. This consumer faces a constraint on how much he or she can borrow, much like the credit limit typically placed on a credit card account. That is, the consumer cannot borrow more than x, where x < we-y+t, with we denoting lifetime wealth. Use diagrams to determine the effects on the consumer's current consumption, future consumption, and saving of a change in x, and explain your results.arrow_forward
- You have $40,000 of current income and $60,000 of future income. The interest rate between the current and future period is 5 percent. What is the maximum amount you could consume in the future? O $100,000 O $107,000 O $102,000 O $110,000arrow_forwardM1arrow_forwardTheodore D. Kat is applying to his friendly, neighborhood bank for a mortgage of $200,000. The bank is quoting 6%. He would like to have a 25-year amortization period and wants to make payments monthly. What will Theodore’s payments be? 48 LO3arrow_forward
- Question 5 I need an explanation on this question pleasearrow_forward2arrow_forward3. A firm has available the following set of investment options. Additionally, the firm can always lend money to other firms, thereby receiving a return of 6%. Or they can borrow up to $100,000 at a rate of 10%. What should the firm's MARR be if they had a budget for projects of $40,000? Project 1 2+ LO CO 3 4 5 6 Invesment Rate of Return $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 20% 15% 10% 8% 7% 4%arrow_forward
- What is the value of n with interest 10% that makes the present value equal to O? 100 100 3. lo00 Given formula: (1+i)"-1 P=A- iX(1+i)"arrow_forwardIf the discount rate on 3-month commercial paper is 4.9% while the yield on 3-month CDs is 5%, the real difference between them in basis points (in terms of yield) is: (You may need to look up how many basis points there are in a percentage point) Select one: a. 39 O b. 0.39 O c. 0.1 O d. 10 O e. 3.9arrow_forwardPlease show workarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning