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2 years ago

Which cash flow would you rather pay, $425 today or $500 in two years if interest rates are 10 percent? Why?

Business

1 answer:

DerKrebs [107]2 years ago

7 0

Answer:

Explanation:

The main goal is to compare these two based on the same terms; present values. Find the present value of $500 today by discounting it using 10% interest rate over two years.

PV = FV/ (1+r)^n

where FV = Future value = $500

r = discount rate = 10% or 0.10 as a decimal

n = total duration of investment = 2

PV = $500/(1+0.10)^2

PV = $500/1.21

PV = $413.22

Since you are basing the decision on what you would rather pay, you would want a lower pay amount. The $425 is already in its present value terms and it is more expensive. Therefore, you would prefer to pay $500 in two years.

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George is going shopping for a new car to replace his old one. Which of these costs would be

uranmaximum [27]

The cost that would relevant in the choice of a new car is the the cost to operate the new vehicles.

<h3>What cost would be relevant?</h3>

The cost that would be relevant in the choice of a new car is the cost that is dependent on the type of car chosen. The cost to operate the new car would depend on the type of car chosen. If George buys a more fuel efficient car, the cost of running the car would be cheaper.

To learn more about cost, please check: brainly.com/question/27127934

4 0

2 years ago

Eleonore and Henry form a partnership to operate a horseback-riding business. The two partners file a duly executed statement of

malfutka [58]

Answer:

Yes, because Henry had authority to sell the horse

Explanation:

In the given scenario Henry had apparent authority to sell the horse.

Apparent authority is the ability of an agent to act on behalf of a principal even though this is not clearly stated out. It is as a result of a third party assuming the agent has such power.

James rightly assumed Henry had the power to sell the horse.

So the sale of the horse is binding on Eleonore.

4 0

2 years ago

The toxic condition caused by excessive waste products in the bloodstream is known as.

AVprozaik [17]

Answer:

uremia or uremic poisoning

Explanation:

8 0

1 year ago

In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem,

Lilit [14]

Answer:

S>I

Explanation:

$Y = C + I + G + (X - M) \\Y = C + I + G + NX$

National saving is the income of the nation left after paying for government purchases and consumption. So,

$S = Y - C - G$

$Y = C + S + G \\$

Plugging this back into the equation for GDP, we get

$Y = C + I + G + NX \\C + S + G = C + I + G + NX \\S = I + NX \\S = I + NX\\S = I + NCO$

where, NCO is Net capital outflow.

When there is balanced trade, we have

$X = M \\i.e \\NX = 0 \\So, S = I$

When there is trade surplus, we have

$X>M \\NX > 0 \\NCO > 0 \\Y > C + I + G$

Thus,

$S > I$

6 0

2 years ago

At point A on a demand curve, price is $10 and quantity demanded is 100. At point B, price is $12 and quantity demanded is 80. W

Jet001 [13]

Answer:

Price elasticity of demand is -1

Explanation:

Price elasticity of demand is defined as the degree of responsiveness of quantity demanded to changes in the price of a product. It is calculated by finding ratio of percentage change in demand to percentage change in price.

Percentage change in demand= (80-100)/100= -20/100

Percentage change in demand= -0.2

Percentage change in price= (12-10)/10

Percentage change in price= 2/10= 0.2

Elasticity= Percetage change in quantity demanded/ percentage change in price

Elasticity= -0.2/0.2= -1

5 0

2 years ago