Answer:
a-1. The present value of Plan 1 = $93.08
a-2. The deal 2 which involves paying immediately adn taking the 10% discount is better.
Explanation:
a-1.
The interest rate of 5% is taken as the discount rate to convert future cash flows into the present value.
The First payment plan with installments has a present value of,
Present Value-Plan 1 = 25 + 25/1.05 + 25/1.05² + 25/1.05³ = $93.08
a-2.
The first plan will cost $93.08 in the present value.
The second plan will involve immediate payment and a discount of 10%vwhch makes the present value of plan 2 as $90 (100 - (100*0.1)).
Thus, the second deal or deal involving immediate payment and taking the discount is better.
Answer: Appreciate
Explanation:
When a country increases interest rates, it will lead to an appreciation in currency. This is because there will be more demand for the currency of the country because people will want to take advantage of the higher interest rates and make a gain.
As the demand for the currency increases but the supply stays the same, the value of the currency will appreciate.
With Australia taking up their interest rates, their dollar will appreciate in value.
Answer:
Limited liability means the business owners' liability for debts is restricted to the amount they put into the business. With unlimited liability, the business owner is personally responsible for any loss the business makes.
Explanation:
Answer:
The answer is consumer's surplus
Explanation:
Consumer's surplus is the difference between what the consumer or buyer is willing to pay and the amount he or she eventually paid.
For example, Mr A is willing to pay $100 for a product and the producer is willing to sell for $90. After much negotiation between mr A and the seller, he eventually paid $85. What he paid was lower than what he was willing to pay before.
So the consumer surplus is $100 - $85 = $15
