Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 13, Problem 8P
To determine
The present value of each of the following future payments.
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1. How is the future related to the present value of a single sum?2. How is the present value of a single sum related to the present value of an annuity? 3. Why does money have a time value?4. If, as an investor, you had a choice of daily, monthly, or quarterly compounding. which would you choose? Why?
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1. What is the exact simple interest on $2,800 for the period from February 12 to july 6 of 1996, if the rate of interest is 4%?
2. You owe $120,000 from your ex-girlfriend and promise to pay 6% simple interest. How much will you pay at the end of 1 year and 6 months?
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If the interest rate is 7.0%, what is the present value of a perpetuity paying $210 per year? (A perpetuity is a bond that makes payments forever.) Round to the nearest dollar. Do not use dollar signs
or commas in your answer. Example: if the answer is $1,234.56, then write "1235"
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