The Owner of a Certain Investment Is Entitled to Receive

question 112

Multiple Choice

The owner of a certain investment is entitled to receive $38 at the end of every six months for 11 years plus an additional single payment of $1,000 in 11 years. Mandy is thinking about purchasing this investment. If Mandy requires a rate of return of 8.4% compounded semi-annually what is the value of this investment to her?

• A) $1,538.79
• B) $1,240.49
• C) $943.28
• D) $989.22
• E) $1,093.56

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Definitions:

Labor Shortage

A situation in which employers have difficulty filling vacancies because there are not enough available workers with the necessary skills.

Unemployment

The situation where individuals who are capable of working and are actively seeking employment are unable to find a job.

Binding Price Ceiling

A government-imposed maximum price on goods or services that is set below the market equilibrium price, leading to shortages.

Binding Price Floor

A government-imposed price control that sets a minimum price for a good or service above the equilibrium price, leading to excess supply.