In Answering Which of the Following Questions Would You Find

question 6

Multiple Choice

In answering which of the following questions would you find it necessary to calculate a present value?

• A)Should Jane put $1,000 today into a 5-year certificate of deposit that pays 4 percent annual interest?
• B)Should ABC Corporation buy a factory today for $2 million,knowing that the factory will yield the corporation $3 million after 5 years?
• C)If Jill puts $5,000 today into a bank account that pays 3 percent interest,then how much will she have in the account after 2 years?
• D)You would find it necessary to calculate a present value in order to answer all of these questions.

---

Definitions:

Federal Reserve Policy

The monetary policy actions by the Federal Reserve, aimed at influencing economic conditions, particularly interest rates and inflation.

Economic Downturn

A period of reduced economic activity characterized by declining GDP, falling incomes, and rising unemployment.

New Deal

Initiatives involving public works, financial reforms, and regulatory measures, launched by President Franklin D. Roosevelt in the 1930s in the United States, designed to assist in overcoming the effects of the Great Depression.

Moving Assembly Line

An innovation in manufacturing where products move from workstation to workstation where different tasks are performed until the product is completed.