How Much Would $20,000 Due in 50 Years Be Worth

question 163

Multiple Choice

How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?

• A) $438.03
• B) $461.08
• C) $485.35
• D) $510.89
• E) $537.78

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Definitions:

Externality

A cost or benefit from production or consumption that accrues to someone other than the immediate buyers and sellers of the product being produced or consumed (see negative externality and positive externality).

Third Party

An individual or group besides the two primarily involved in a transaction or legal matter, sometimes involved as an intermediary or independent party.

Transaction

An exchange or transfer of goods, services, or funds between two or more parties.

Deadweight Losses

Efficiency losses in an economy occurring when total societal welfare is not maximized, typically as a result of market distortions like taxes or subsidies.