A Company Has Developed a Unique Way to Allow Their

question 2

Multiple Choice

A company has developed a unique way to allow their employees to accumulate $5000 in order to buy $5000 worth of shares in the company.The company will set up an account for each employee,paying interest at j₁₂ = 12%.At the end of every month the company will deduct an amount from an employee's pay and deposit it into this account (first deduction made 1 month from now) .The company has decided to deduct n-payments of $81.25,plus make a smaller concluding deduction one month after the final deduction of $81.25,at which time the employee will have $5000.What is the size of this smaller concluding deduction?

• A)$24.08
• B)$25.66
• C)$25.92
• D)No final deduction is needed

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Definitions:

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies while the other players' strategies remain unchanged.

Game

A strategic interaction among players, where each one makes decisions by considering the potential choices and outcomes of others.

Rival

A good whose consumption by one person diminishes the quantity or quality available for consumption by others.

Price Leadership

An informal method that firms in an oligopoly may employ to set the price of their product: One firm (the leader) is the first to announce a change in price, and the other firms (the followers) soon announce identical or similar changes.