Answer: a. $73,810.88
b. $10,185.18
Explanation:
a. The payments of $11,000 are constant so this can be considered an Annuity.
The cost of the Computer is it's present value which is,
Present Value of Annuity = Annuity Payment * Present Value Interest Factor of Annuity, 11%, 10 periods
= 11,000 * 6.71008 (Payment is made at the end of the year so this is an Ordinary Annuity)
= $73,810.88
b. When an Annuity is instead paid at the beginning of the period it is considered to be an Annuity due.
The formula is the same but for the figures ,
Present Value of Annuity Due = Annuity * Present Value Interest Factor of an Annuity Due, 11% , 10 periods
73,810.88 = Annuity * 7.24689
Annuity = 73,810.88/7.24689
= $10,185.18
Solution :
Given :
The bonds offer a 
of 4.5% per year
Tax rate = 10% = 0.10
Inflation rate = 2
= + 
= 2 + 4.5
= 6.5
= 
= 
= 5.85
After tax real interest rate = 
-
= 5.85 - 2.0
= 3.85
= 7.0
= +
= 7 + 4.5
= 11.5
= 
= 10.35
= 11.5 x (1 - 0.10)
= 11.5 x 0.90
= 10.35
= -
= 10.35 - 7.0
= 3.35
Putting all the value in table :
Real interest Nominal interest After tax nominal After tax
rate rate interest rate interest rate
2.0 4.5 6.5 5.85 3.85
7.0 4.5 11.5 10.35 3.35
Comparing with the 
, a 
will increase the after after tax real interest rate when the government taxes nominal interest income. This tends to encourage saving, thereby increase the quantity of investment in the economy and the increase the economy's long-run growth rate.
Answer:
Natural:
b.A diamond company that owns nearly all of the world's diamond mines.
d.A soda company that spends over $3 billion on advertising every year.
e.A waste-treatment plant that cost a lot to build even though it costs only two cents to treat each gallon of waste.
Government
a.A small-town bar that is the only establishment in the county licensed to serve liquor.
c. A pharmaceutical company receives a patent for a new cancer-fighting drug.
Explanation:
Government barriers are licenses or patents that prevent future firms from entering, natural is everything else.
