If I Is the Interest Rate and X Is the Number

question 159

Multiple Choice

If i is the interest rate and X is the number of dollars to be received after t years, the formula to calculate the present value of a future payment is

• A) \(( 1 + i ) ^ { t } X\)
• B) \(X / ( 1 + i ) ^ { t }\)
• C) \(i ^ { t } / ( 1 + X )\)
• D) \(( X /i ) t\)

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.

Capital

Economic resources used in the production of goods and services, such as machinery, buildings, or tools.

Construction Crane

A type of machinery used on construction sites to lift and lower materials and to move them horizontally.

Savings Account

A deposit account held at a financial institution that provides principal security and a modest interest rate.