Answer:
Instructions are listed below
Explanation:
Giving the following information:
The son will enter college 10 years from now. An annual amount of $40,000 in constant dollars will be required to support the son's college expenses for four years.
The future general inflation rate is estimated to be 6% per year, and the market interest rate on the savings account will average 8% compounded annually
A) We need to find the present value for each 40,000-year expense.
Formula= FV/(1+i)^n
1: PV= 40,000/(1.06)^10= 22,335.80
2: PV= 40,000/(1.06)^11= 21,071.50
3: PV= 19,878.77
4: PV= 18,753.56
B) Total final value= 160,000
PV= 160,000/1.06^10= $89,343.16
C) We need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (160,000*0.06)/[(1.06^10)-1]= $12,138
Answer:
hedonic Theory of Wages:
Accept just two kinds of occupations in the work showcase (safe employments versus unsafe occupations). Under this, sheltered employments have likelihood of zero that specialist gets harmed. Unsafe occupations have likelihood of 1 and laborers know this. Laborers care about whether their occupations are sheltered or hazardous.
Laborers expand utility by picking wage-chance blends that offer them the best measure of utility. Expect laborers disdain hazard, yet to various degrees, for example they have diverse ideal pay chance blends. Firms are on their isoprofit bends that give the hazard wage mixes that give zero (financial) benefit. They vary between firms. An indulgent pay work mirror the connection among wages and occupation qualities. It matches laborers with various hazard inclinations with firms that can give employments that coordinate these diverse hazard inclinations.
Apathy bends uncover the exchange offs that a laborer favors among wages and level of hazard (chance thought to be an 'awful'). To give a similar utility, dangerous occupations must compensation higher wages than safe employments. The more prominent the laborer's aversion for hazard, the more prominent the pay off required for changing from a safe to an unsafe activity, and the more noteworthy the booking cost. As the pay firms bring to the table for hazardous occupations increments, less firms will extend to dangerous employment opportunities and bringing about a descending slanting interest bend as it turns out to be increasingly productive for firms to make occupations spare than to pay the higher compensation.
Suppositions of Differential Wage Theory are:
- The compensation differential is sure. Hazardous employments pay more than spare occupations.
- The balance wage differential is that of the last laborer employed (the peripheral specialist). It's anything but a proportion of the normal abhorrence for chance among laborers in the work showcase.
- Along these lines, everything except the minimal specialist are overcompensated by the market.
On the off chance that a few specialists like to work in dangerous occupations (they are eager to pay for the option to be harmed) and if the interest for such laborers is little, the market repaying differential is negative. At point P, where supply rises to request, laborers utilized in unsafe occupations acquire not as much as laborers utilized in safe employments. The outline given beneath shows the circumstance:
Isoprofit Curve:
As it is exorbitant to create well-being, a firm contribution hazard level P* can make the working environment more secure for example move left on flat pivot, just on the off chance that it diminishes compensation while keeping benefits consistent, so that the iso-benefit bend is upward slanting. Higher isoprofit bend returns lower benefit.
Answer:
$7,213.40
Explanation:
The computation of the net present value is shown below:
= Present value of all yearly cash inflows after applying discount factor - initial investment
where,
Initial investment is $50,000
And, the present value till 3 year would be
= Annual cash flows × PVIFA factor for 3 years at 12%
= $18,000 × 2.4018
= $42,232.40
And, the present value for fourth year would be
= Annual cash flows × present value factor
= $22,000 × 0.6355
= $13,981
So, the total present value would be
= $43,232.40 + $13,981
= $57,213.40
Since the annual cash flows are same for the three years so we use the PVIFA table
Refer to the PVIFA table
Now put these values to the above formula
So, the value would be equal to
= $57,213.40 - $50,000
= $7,213.40
Answer: $50000
Explanation:
Based on the information that's been given in the question, firstly we need to calculate the excess reserves which will be:
= $4500 - (10% × $40000)
= $4500 - $4000
= $500
Then, the money supply that's expanded will be:
= Excess reserve / Reserve ratio
= $5000 / 10%
= $5000 / 0.1
= $50000
Therefore, the answer is $50,000.