Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 9, Problem 2CQQ
To determine
Calculation of
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The interest rate is 6 percent a year and you expect to receive $1,000 next year and the following year. What is present value of $1,000 to be received in two years? The present value of $1,000 to be received in two years is $____ Answer to 2 decimal places
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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 that the interest rate is 5 percent.
Enter your answers rounded to 2 decimal places.
A. What is the future value of $100 four years from now?
$
How much of the future value is total interest?
$
b. By how much would total interest be greater at an interest rate of 7 percent than at an interest rate of 5 percent?
$
Chapter 9 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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- Suppose that the interest rate is 4 percent. What is the future value of $100 four years from now? How much of the future value is total interest? By how much would total interest be greater at a 6 percent interest rate than at a 4 percent interest rate?arrow_forwardEconomics Q) A star baseball player signs a contract that would pay a total of $16 million. The player receives $4 million upon signing, and $3 million every year for the next four years. (In other words, the player will receive $4 million today, $3 million in a year from today, etc.)At an interest rate of 4 percent, the sum of the present value of the contract is $__. Your answer should be a whole number. If the contract is spread over fewer years, the present value of the contract would __________ (options: increase or decrease)arrow_forwardYou are offered an investment that will pay you GH¢ 200 in one year, GH¢ 400 the next year, GH¢ 600 the next year and GH¢ 800 at the end of the next year. You can earn 12 percent on very similar investments. What is the most you should pay for this one?arrow_forward
- 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?arrow_forwardConsider that you were given a US savings bond that will pay $100 when it matures in ten years. What happens if the interest rate rises to the present value of this bond payment?Why happens if the interest rate rises to the present value of this bond payment? A. Increases in present value B. The current value is unaffected. C. A decrease in present valuearrow_forwardWhat 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_forward
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