If the Interest Rate Is 18%, and Will Remain 18

question 15

Multiple Choice

If the interest rate is 18%, and will remain 18% forever, how much would a rational investor be willing to pay for an asset that will pay him 9,440 dollars 1 year from now, 1,392 dollars 2 years from now, and nothing at any other time?

• A)9,000 dollars
• B)171,000 dollars
• C)8,000 dollars
• D)50,000 dollars
• E)10,000 dollars

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Definitions:

Republican Party

A major political party in the United States, also known as the GOP (Grand Old Party), which traditionally supports conservative policies, including smaller government, lower taxes, and strong national defense.

Same-Sex Marriage

A legally recognized marriage between two individuals of the same sex, granting them the same rights and responsibilities as opposite-sex couples.

Protestant

A member of the Christian faiths that broke away from the Roman Catholic Church during the Reformation in the 16th century.

National Rifle Association

An American nonprofit organization that advocates for gun rights and the protection of the Second Amendment of the U.S. Constitution.