Which is larger: the present value of $1 two years from now or the present value of $1 one year from now? Explain
What will be an ideal response?
The present value of $1 one year from now is greater than the present value of $1 two years from now. At the same interest rate, a individual would have to put a greater amount aside if he wanted to end up with $1 after one year than he would have to if he put the money aside for two years.
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Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?
A) Significant economies of scale exist. B) The market price of the product is too high. C) The firm has a patent on the good or control over some resource required for the production of the good. D) The firm has government authorization to be a monopoly.
Elaine owns a beautiful diamond ring she purchased for $2,500. When she has it appraised she learns that it is now worth $3,000. Based on this information:
A. Elaine's wealth is unchanged. B. Elaine's saving this year has increased by $500. C. Elaine's saving this year has decreased by $500. D. Elaine has experienced a $500 capital gain.