Answer:
player 2 is signing a better contract
Explanation:
the present value of an annuity (player 1) = annual payment x annuity factor
assuming that the interest rate is 10%
present value = $10 million x 6.1446 (PV annuity factor, 10%, 10 periods) = $61.446 million
player 2's contract
the present value of a growing annuity = [payment / (i - g)] x {1 - [(1 + g) / (1 + i)]ⁿ} = [$10 / (10% - 5%)] x {1 - [(1 + 5%) / (1 + 10%)]¹⁰} = $200 x 0.372 = $74.398 million
Answer:
Equilibrium quantity would increase. there would be an indeterminate effect on equilibrium price
Explanation:
If fewer people go on vacation fewer people would board planes. As a result, the demand curve for planes would shift inwards. This would lead to a decrease in equilibrium price and quantity.
As a result of the higher cost of providing services, fewer planes would be in operation. This would lead to an inward shift of the supply curve. Equilibrium price would increase and equilibrium quantity would decrease.
Taking this two effects together, equilibrium quantity would increase. there would be an indeterminate effect on equilibrium price.
Answer: Trade creation
Explanation:
Trade creation is the increase in economic welfare which occurs when a country joins a free trade area, like the customs union. Trade creation will happen when the ltariff barriers has been reduced which leads to lower prices.
Trade creation leads to lower cost on producers which will lead to a rise in economic welfare and consumer surplus. Trade creation also leads to expansion of trade.
Answer:
Unrealized gain = $12,000
Explanation:
Security Cost A Fair value B Unrealized amount (B-A)
ABC $40,000 $55,000 $15,000
DEF $72,000 $65,000 -$7,000
XYZ $16,000 $20,000 <u>$4,000</u>
Total <u>$12,000</u>
So, the unrealized gain to be recorded is $12,000
