In answering which of the following questions would you find it necessary to calculate a present value?
a. Should Jane put $1,000 today into a 5-year certificate of deposit that pays 4 percent annual interest?
b. Should ABC Corporation buy a factory today for $2 million, knowing that the factory will yield the corporation $3 million after 5 years?
c. If Jill puts $5,000 today into a bank account that pays 3 percent interest, then how much will she have in the account after 2 years?
d. You would find it necessary to calculate a present value in order to answer all of these questions.
b
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Which of the following is true about long-run equilibrium in a monopolistically competitive market?
a. Firms earn zero economic profit because price equals long-run average cost, but the equilibrium is not allocatively efficient because price exceeds the marginal cost of the last unit produced. b. They may earn negative, zero, or positive economic profit because monopolistically competitive firms are price takers. c. Each firm faces a perfectly elastic demand curve and earns zero economic profit because price equals long-run average cost, and are allocatively efficient because price equals marginal cost for the last unit sold. d. None of the above are correct.
Which of the following is the best example of a monopolistically competitive market?
a. Wheat. b. Automobiles. c. Diamonds. d. Retail sales.