How Would We Compute the Present Discounted Value of Payments

question 138

Multiple Choice

How would we compute the present discounted value of payments of $8,000 received three years in the future and $10,000 received four years in the future? The interest rate is expected to be 5 percent for the next four years.

• A) 8,000/((1.05)³) + 10,000/((1.05)⁴)
• B) 8,000/((1.5)³) + 10,000/((1.5)⁴)
• C) 8,000/(1.05) + 10,000/((1.05)²)
• D) 8,000/(1.03) + 10,000/(1.04)

Identify and explain the major components of national income.

Recognize the role of investments, government spending, and net exports in the economy.

Understand how economic growth and inflation affect real GDP per capita.

Distinguish between GDP and Net Domestic Product (NDP) and their respective significance.

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Definitions:

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A dead axle that can be raised and lowered using air pressure.

Hinged Trailer Door

a door mechanism on trailers that is attached by hinges, allowing it to swing open and closed for access or loading.

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