Answer:
$573,963
Explanation:
First, calculate the present value of the loan payments using the following formula
PVA = PMT x [ ( 1 + r )^n - 1 ] / [ r ( 1 + r )^n)
PVA = $950 x [ ( 1 + 7.1%/12 )^360 - 1] / [ 7.1%/12 ( 1 + 7.1%/12 )^360)
PVA = $141,362.32
Now calculate the difference of Value of loan and the present value of loan payment
Difference = Loan value - PV of loan payment = $210,000 - $141,362.32 = $68,637.68
This te Ballon payment in present value term, We need to determine the value at the end of the loan term.
Hence we need to calculate the future value of this payment as follow
Future value = Present vale x ( 1 + Monthly Interest rate )^numbers of months
Future value = $68,637.68 x ( 1 + 7.1%/12 )^360
Future value = $573,963.09
Future value = $573,963
Hence the ballon Payment will be $573,963
First option.
Indeed, some people may benefit by paying the artificial price, but not all as other people may not be able to satisffy all their demand as a price ceiling will also effectively create a shortage due to the low prices disincentivizing producers.
Question:
If the marginal product of capital net depreciation equals 8 percent, the rate of growth of population equals 2 percent, and the rate of labor-augmenting technical progress equals 2 percent, to reach the Golden Rule level of the capital stock, the ____ rate in this economy must be _____.
A) saving; increased
B) population growth; decreased
C) depreciation; decreased
D) total output growth; decreased
Answer
The correct answer is A) <u>Saving</u> rate of the economy must be i<u>ncreased</u> in order for the economy to reach the Golden Rule Level of the Capital Stock.
Explanation
Golden Rule Level of the Capital Stock is the level at which
MPK = δ,
Where MPK is Marginal Product; and δ the depreciation rate;
so that the marginal product of capital equals the depreciation rate.
In the Solow growth model, a <em>high saving rate results in a large steady-state capital stock and a high level of steady-state output.</em> A low saving rate results to a small steady state capital stock and a low level of steady-state output. Higher saving leads to faster economic growth only in the short run. An increase in the saving rate raises growth until the economy reaches the new steady state. That is, if the economy retains a high saving rate, it will also maintain a large capital stock and a high level of output, but it will not maintain a high rate of growth forever .