Answer: Proposal C
Explanation:
The way to solve this is to calculate the Present Values of all these payments. The smallest present value is the best.
Proposal A.
Periodic payment of $2,000 makes this an annuity.
Present value of Annuity = Annuity * ( 1 - ( 1 + r ) ^ -n)/r
= 2,000 * (1 - (1 + 0.5%)⁻⁶⁰) / 0.5%
= $103,451.12
Proposal B
Present value = Down payment + present value of annuity
= 10,000 + [2,200 * ( 1 - ( 1 + 0.5%)⁻⁴⁸) / 0.5%]
= 10,000 + 93,676.70
= $103,676.70
Proposal C
Present value = Present value of annuity + Present value of future payment
= [500 * (1 - (1 + 0.5%)⁻³⁶) / 0.5%] + [116,000 / (1 + 0.5%)⁶⁰]
= 16,435.51 + 85,999.17
= $102,434.68
<em>Proposal C has the lowest present value and so is best. </em>
The answer is C! hope this helped!
would reduce the multiplier. If the Fed wanted to offset the effect of this on the size of the money supply, it could have bought bonds
Answer: Option D.
<u>Explanation:</u>
The situation that has been explained in the question would result in the increase in the money in hand with the people because of which the investment decreased and the economy slowed down.
This will have an adverse effect on the multiplier which is working on the economy because of the reduction in the investment in the economy and the fed should work to solve this problem by buying some of the bonds to increase the money in the deposits.
<u />
Time =2,015−1,941=74 years
Annual increase=(1,905,000÷0.7)^(1÷74)−1=0.2217×100=22.17%