The Price of an Antique Is Expected to Rise by 8

question 34

Multiple Choice

The price of an antique is expected to rise by 8% during the next year.The interest rate is 12%.You are thinking of buying an antique and selling it a year from now.You would be willing to pay a total of 800 dollars for the pleasure of owning the antique for a year.How much would you be willing to pay to buy this antique?

• A)6,666.67 dollars
• B)20,000 dollars
• C)800 dollars
• D)16,800 dollars
• E)8,000 dollars

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Definitions:

Fixed Costs

Fixed expenses, including rent, salaries, and insurance, that are unaffected by variations in production or sales levels.

Units Produced

A measure of output representing the total number of units of a product made by a company or an industry during a given period.

Costs

The monetary value spent by a company to produce goods or services, including expenses such as materials, labor, and overhead.

Forecasting Risk

The risk associated with the potential inaccuracies in predicting future developments, which can impact planning and decision-making.