The Interest Rate Is 10

question 22

Multiple Choice

The interest rate is 10%.A certain piece of land can be used for a parking lot, in which case there are no construction costs and it will yield a net return of $5,000 per year forever starting one year from now.Or it can have a house built on it.Building a house would cost $50,000 now.If a house is built on the lot, it will yield a stream of net income equal to $12,000 per year starting one year from now.No other uses are contemplated.The theory of asset markets predicts that the lot will sell for

• A)$120,000 and a house will be built on it.
• B)$50,000 and it will be used as a parking lot.
• C)$70,000 and a house will be built on it.
• D)$13,200 and a house will be built on it.
• E)$80,000 and it will be used as a parking lot.

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Definitions:

Production Processes

The methods, techniques, and sequences involved in manufacturing goods and services, from raw materials to finished products.

Business Unionism

A model of unionism focused on improving wages, benefits, and working conditions, rather than broader social or political change.

Employee Empowerment Unionism

A form of unionism focusing on empowering employees by giving them a say in their working conditions and decisions affecting their jobs.

Craft Unionism

A form of unionism focusing on workers in a specific trade or craft, aiming to maintain high standards and wages for those professions.