(Ignore Income Taxes in This Problem

question 6

Multiple Choice

(Ignore income taxes in this problem.) You have deposited $16,727 in a special account that has a guaranteed interest rate. If you withdraw $4,300 at the end of each year for 5 years, you will completely exhaust the balance in the account. The guaranteed interest rate is closest to:

• A) 6%
• B) 29%
• C) 9%
• D) 26%

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Definitions:

Isocost

A line representing all combinations of a firm’s inputs that have the same total cost.

Total Cost

The total of constant and fluctuating expenses involved in the creation of products or services.

Isocost Line

a graphical representation in economics showing all possible combinations of inputs that cost the same amount for a firm.

Price Of Capital

The cost of utilizing capital or funds in the production of goods or services, often expressed as an interest rate.