If the Interest Rate Is 19% and Will Remain 19

question 15

Multiple Choice

If the interest rate is 19% and will remain 19% forever, how much would a rational investor be willing to pay for an asset that will pay him 2,380 dollars 1 year from now, 1,416 dollars 2 years from now, and nothing at any other time?

• A)2,000 dollars
• B)3,000 dollars
• C)15,789.47 dollars
• D)60,000 dollars
• E)4,000 dollars

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Definitions:

Month-to-Month Tenant

A renter who occupies a property with a lease that renews on a monthly basis rather than a fixed term longer than one month.

Storage Locker

A unit designed for the safekeeping of personal or commercial belongings, usually rentable at self-storage facilities.

Order of Eviction

A legal document issued by a court that directs a tenant to vacate a property within a specified timeframe due to violations such as non-payment of rent or breach of lease terms.

Breach of Contract

The violation of any of the agreed-upon terms and conditions of a binding contract, which may give rise to legal consequences for the party in breach.