Two Payments of $10 000 Each Must Be Made One

question 54

Multiple Choice

Two payments of $10 000 each must be made one year and four years from now. If money can earn 9% compounded monthly, what single payment two years from now would be equivalent to the two scheduled payments?

• A) $10 938
• B) $8358
• C) $11 964
• D) $22 902
• E) $19 296

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Definitions:

Tariff

A tax imposed on imported goods and services to increase their price and make domestic products more competitive.

U.S. Market

This term refers to the economic market in the United States encompassing the trading of goods, services, securities and commodities.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than others.