If the Interest Rate Is 13% and Will Remain 13

question 23

Multiple Choice

If the interest rate is 13% and will remain 13% forever, how much would a rational investor be willing to pay for an asset that will pay him 6,780 dollars 1 year from now, 1,276 dollars 2 years from now, and nothing at any other time?

• A)53,846.15 dollars
• B)6,000 dollars
• C)98,000 dollars
• D)7,000 dollars
• E)8,000 dollars

---

Definitions:

Equilibria

The condition in which all competing influences are balanced in a wide variety of contexts, including economics where supply equals demand.

Markets

Systems, institutions, or environments where buyers and sellers interact to exchange goods, services, or information.

Technological Change

Adjustments or improvements in the method of production, invention, and innovation in processes that often lead to increased productivity.

Microwave Ovens

Appliances that use microwave radiation to cook or heat food, offering a quick and convenient method of food preparation.