If the Interest Rate Is 8 Percent, $54 Next Year

question 42

Multiple Choice

If the interest rate is 8 percent, $54 next year is worth __________ today.

• A)$62
• B)$50.68
• C)$50
• D)$4.32

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Definitions:

Competitive Market

A market structure characterized by a large number of sellers and buyers, free entry and exit, and products that are similar enough to be considered substitutes, leading to price competition.

Economic Profit

The difference between a company's total revenue and its total costs, including both explicit and implicit costs, representing the financial gain in excess of opportunity costs.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices or market conditions.

Sunk Costs

Costs that have already been incurred and cannot be recovered.