Suppose the Government Is Considering a Program to Give Housing

question 47

True/False

Suppose the government is considering a program to give housing vouchers to poor people. Assume the value of the voucher is greater than the amount currently being spent on housing per month by poor people. The housing voucher will lead to fewer apartments for poor people.

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Definitions:

NPV

Net Present Value, a calculation that represents the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Discount Rate

The interest rate that a central bank charges financial institutions for short-term loans, or used in discounted cash flow (DCF) analysis to present value future cash flows.

APR

The Annual Percentage Rate, which is the interest rate for a whole year on a loan, including fees.

Present Value Payback Period

A capital budgeting technique that calculates the period of time required for the present value of future cash flows to cover the initial investment cost.