If the Annual Interest Rate Is 8%,an Asset That Promises

question 62

Multiple Choice

If the annual interest rate is 8%,an asset that promises to pay $160 after each of the next two years has a present value of

• A)$178.32.
• B)$285.32.
• C)$296.30.
• D)$300.00.
• E)$320.00.

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Definitions:

Market Economy

A market mechanism where investment, production, and distribution decisions are informed by supply and demand forces, with the prices of goods and services set within an open pricing system.

Without Government

A scenario that describes a situation or theoretical condition where governmental institutions and interventions do not exist or are absent.

Pollution

The contamination of air, water, or soil by substances that are harmful to living organisms.

Pigouvian Tax

A tax imposed on any market activity that generates negative externalities, intended to correct the market outcome by internalizing the costs of the externality.