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Question 43948

posted 10 months ago

2.7 Suppose that, to cover some of your college expenses, you are obtaining a personal loan from your uncle in the amount of $10,000 (now) to be repaid in two years. If your uncle always earns10% interest (compounded annually) on his money invested in various sources, what mini-mum lump-sum payment two years from now would make your uncle happy economically?

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Question 43947

posted 10 months ago

2.6 Suppose you have the alternative of receiving either $10,000 at the end of five years or P dollars today. Currently. you have no need for the money, so you deposit the P dollars into a bank account that pays 6% interest compounded annually. What value of P would make you indifferent in your choice between P dollars today and the promise of $10,000 at the end of five years?

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Question 43949

posted 10 months ago

2.8 Which of the following alternatives would your rather receive, assuming an interest rate of 8% compounded annually?
Alternative 1: Receive $100 today:
Alternative 2: Receive $120 two years from now.

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Question 43951

posted 10 months ago

Your company wants to purchase a small jet airplane for the executive team to use. The plane costs $1,500,000. Calculate the depreciation schedule (book value and depreciation charge) using the following methods
a) CCA for the first 5 years
b) DOB for 5 years with no salvage value
ci SL for 5 years with no salvage value

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Question 43955

posted 10 months ago

(10) 6. A $1000 face value corporate bond is offered for sale for $800. The bond has an annualdividend rate (coupon rate) of 8% per year. Dividends are paid quarterly. The bond is purchased andheld until it matures in 5 years. What is the present value of the buyer's cash flow if his MARR is 10%per year compounded quarterly?

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Question 43952

posted 10 months ago

An investor took out a loan of 300,000 at 6% compounded monthly, to be repaid over 20 years.
(a) Find the monthly payment for this loan.

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Question 43950

posted 10 months ago

A student bought a $75 used guitar and agreed to pay for it with a single $85 payment at the endof 3 months. Assuming quarterly (3-months) compounding.
What is the nominal annual interest rate?
b. What is the effective annual interest rate?
c. Compare rates of part b) and part a), which one is higher? Why?
If the problem changes, this student bought a $75 used guitar and agreed to pay for it with a single $85 payment at the end of 6 months. Assuming quarterly (3-months) compounding.
d. What is the nominal semi-annual interest rate?
e. What is the effective semi-annual interest rate?

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Question 44148

posted 10 months ago

5. Huong has the following utility function in terms of expected wealth (w) and the risk (thevariation of wealth, A).
\text { The following is her utility function for wealth }(\omega) \text { and risk }(\Delta) u^{H}(\Delta, \omega)=\omega-\frac{\Delta^{2}}{2}
\text { feasible frontier (also called a risk-return schedule): } \omega(\Delta)=-2+6 \Delta-(\Delta)^{2}
She believes she the relationship between wealth and risk can be explained by the following
Choose the statements that are true among the following.
\text { a. Huong's marginal rate of substitution is } \operatorname{mrs}(\Delta, 0)=-2 \Delta \text {. }
\text { b. Huong's marginal rate of substitution is } \operatorname{mr} s(\Delta,(\omega)=2 \Delta \text {. }
\text { c. Huong's constrained utility maximizing bundle of risk and weatth is }(\Delta=2, \omega=6) \text {. }
\text { d. For Huong, risk is a good and wealth is a bad. }
\text { e. Huong's constrained utility maximizing bundle of risk and wealth is }\left(\Delta=\frac{3}{2}, \omega=\frac{21}{4}\right) \text {. }
\text { g. Huong's marginal rate of substitution is } \operatorname{mrs}(\Delta, 0)=-\Delta \text {. }
\text { h. Huong's marginal rate of substitution is } \operatorname{mrs}(\Lambda, a)=\Delta \text {. }

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Question 44144

posted 10 months ago

1. Which of the following is/are not true about Indifference Curve? (more than one maycorrect, select all correct answers for full credit)be
a. Every indifference curve corresponds to one combination of good x and y.
b. An individual is indifferent between any two points on a given indifference curve.
C.Utility remains constant along any given indifference curve.
d. Indifference curves between a good and bad are upward-sloping.
e. Indifference curves cannot cross as long as the individual has consistent preferences.
f. Indifference curves for Perfect Substitutes are L-shaped.

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Question 44145

posted 10 months ago

2. Which one of the following is true about a Cobb-Douglas utility function of
a. This individual is willing to give up three y to get two x when they hold the same amount of xand y.
\text { d. Marginal rate of substitution } m r s(x, y)=(2 y) /(3 x) \text {. }
\text { c. Marginal utility of y equals } 4 x^{-0.4} y^{0.4}
u(x, y)=10 x^{04} y^{0.6} ?
\text { b. Marginal utility of x equals } 6 x^{-0.6} y^{0.6}

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