Faisal has $ 15 comma 000 in his savings account and can save an additional $ 4 comma 500 per year. If interest rates are 12%,
1 answer:
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Answer and Explanation:
1. The discount rate is
If we go through the options
like we assume 10%
So, the net present value is
= ($250,000 × 4.3553) - $1,000,000
= $1,088,825 - $1,000,000
= $88,825
Now if the discount rate is 11%
So, the net present value os
= ($250,000 × 4.2305) - $1,000,000
= $1,057,625 - $1,000,000
= $57,625
So the net present value is $57,625
2. The profitability index is
= ($1,000,000 + $57,625) ÷ ($1,000,000)
= 1.058
3. The internal rate of return is
It is 12.98% that lies between 12.5% and 13%
Answer: After price ceiling is implemented a shortage supply exists if the price ceiling is below the market price
Explanation:
price ceiling is wen the government imposes the maximum price that should be charged for a good or service. The effects of price ceiling depends on whether government sets the maximum price that should be charged for a good or service below or above the market price,
if the government sets the price above the market price, price ceiling will not affect the market, however if the the government sets the price below the market price price ceiling will cause changes in the quantity demanded and quantity supplied.
Please refer to the attachment, in the attachment we see a market that is in Equilibrium and operating efficiently at price P' and Quantity demanded and supply is Q'. when government sets price ceiling below the market price (below P') the quantity demanded will increase to Qdem while quantity supplied decreases to Qsup. This will cause a shortage in the market because quantity demanded is higher than quantity supplied thus creating a Dead weight loss labelled by " DWL "
