Consider the Following Timeline

question 75

Multiple Choice

Consider the following timeline:
If the current market rate of interest is 12%,then the value of the cash flows in year 0 and year 2 as of year 1 is closest to:

• A) $257.29
• B) -$96.57
• C) $78.71
• D) $1.29
• E) -$38.71

---

Definitions:

Market-based Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Mercantilist Economy

An economic theory and practice dominant in modern Europe, advocating for governmental regulation of a nation's economy to augment state power at the expense of rival national powers.

Traditional Economy

An economic system rooted in historic practices and customs, relying on barter and subsistence farming, often with minimal use of technology.

Command-based Economy

An economic system where production, investment, prices, and incomes are determined centrally by a government.