1. You have choice when subscribing to our magazine for four years: you can a)pay $100 now for a four year subscription, b)pay $28 at the beginning of each year for four years, or c)pay $54 today and $54 again two years from today. Which is the best deal for you, the subscriber, if the interest is 10% yearly? 2. Consider a principal amount of $1,000 to be invested for three years at a nominal rate

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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1. You have choice when subscribing to our
magazine for four years: you can
a)pay $100 now for a four year subscription,
b)pay $28 at the beginning of each year for
four years, or
c)pay $54 today and $54 again two years from
today.
Which is the best deal for you, the subscriber,
if the interest is 10% yearly?
2. Consider a principal amount of $1,000 to
be invested for three years at a nominal rate
of 12% compounded semi annually. What
would be the effective annual interest rate for
one year?
Transcribed Image Text:1. You have choice when subscribing to our magazine for four years: you can a)pay $100 now for a four year subscription, b)pay $28 at the beginning of each year for four years, or c)pay $54 today and $54 again two years from today. Which is the best deal for you, the subscriber, if the interest is 10% yearly? 2. Consider a principal amount of $1,000 to be invested for three years at a nominal rate of 12% compounded semi annually. What would be the effective annual interest rate for one year?
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