Question 1

What is the discounted value of $60,000 to be received after 6 years if the ongoing rate of interest is 6 percent per year?

Accepted Answer

A)  $41,212.84 
B)  $42,297.63 
C)  $44,666.95 
D)  $51,220.64 
A)  $41,212.84 
B)  $42,297.63 
C)  $44,666.95 
D)  $51,220.64 B

Question 2

A box has three green balls, six blue balls, and nine red balls.
-Refer to the scenario above. What is the probability of picking a blue ball from the box?

Accepted Answer

A)  16.66 percent 
B)  33.33 percent 
C)  49.99 percent 
D)  54.44 percent. 
A)  16.66 percent 
B)  33.33 percent 
C)  49.99 percent 
D)  54.44 percent. B

Question 3

Wendy and John each deposit $2,000 in a bank account at different rates of interest. Wendy receives interest on her deposit at an annual rate of 6 percent, while John receives interest at an annual rate of 9 percent.
-Refer to the scenario above. What will be the difference between the future values of John's deposit and Wendy's deposit after 3 years?

Accepted Answer

A)  $56.04 
B)  $112.26 
C)  $208.03 
D)  $439.15 
A)  $56.04 
B)  $112.26 
C)  $208.03 
D)  $439.15 C

Question 4

Tom has two investment options. He can either invest $3,000 in a friendʹs project or he can deposit the same amount in a bank that offers him an annual rate of interest of 6 percent. If he invests in his friendʹs project, he will receive $3,400 after 5 years.
-Refer to the scenario above. What is the present value of $3,400 to be received after 5 years?

Accepted Answer

A)  $2,300.78 
B)  $2,540.68 
C)  $3,200.22 
D)  $3,526.44 
A)  $2,300.78 
B)  $2,540.68 
C)  $3,200.22 
D)  $3,526.44

Question 5

An investment of $20,000 offers a return of $15,000 in 10 years and another return of $15,000 after 15 years. The market rate of interest is 6 percent per year.
-Refer to the scenario above. What is the net present value of the investment?

Accepted Answer

A)  -$7,112.36 
B)  -$5,365.10 
C)  -$475.31 
D)  $9,524.19 
A)  -$7,112.36 
B)  -$5,365.10 
C)  -$475.31 
D)  $9,524.19

Question 6

Jerry is interested in purchasing a washing machine. The price of the machine is $500, and it comes with a 1-year warranty. The probability that the machine will break down is 20 percent every year. If the machine breaks down in the second year and Jerry holds a warranty, he receives a new washing machine worth $400 that year. If the machine breaks down after 3 years and he holds a warranty, he receives a new machine that is worth $300 after the third year. The price of a warranty for 3 years is $150. The market interest rate is 5 percent. Is buying the warranty a good investment for Jerry? Explain your answer. Show all the necessary calculations.

Accepted Answer

If the washing machine breaks down in th

Question 7

A bag contains ten green balls, five blue balls, and fifteen yellow balls. If an individual picks a green ball from the bag, she wins $200. If she picks either a blue ball or a yellow ball, she loses $300.
-Refer to the scenario above. What is the expected value of the game?

Accepted Answer

A)  -$15.64 
B)  $27 
C)  -$33.33 
D)  $35.75 
A)  -$15.64 
B)  $27 
C)  -$33.33 
D)  $35.75

Question 8

Wendy and John each deposit $2,000 in a bank account at different rates of interest. Wendy receives interest on her deposit at an annual rate of 6 percent, while John receives interest at an annual rate of 9 percent.
-Refer to the scenario above. What will be the future value of John's deposit after 1 year?

Accepted Answer

A)  $2,120 
B)  $2,180 
C)  $2,320 
D)  $2,460 
A)  $2,120 
B)  $2,180 
C)  $2,320 
D)  $2,460

Question 9

An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above. What is the present value of Option A?

Accepted Answer

A)  $2,464.11 
B)  $2,385.07 
C)  $2,463.66 
D)  $4,898.46 
A)  $2,464.11 
B)  $2,385.07 
C)  $2,463.66 
D)  $4,898.46

Question 10

An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above. What is the present value of Option B?

Accepted Answer

A)  $2,463.66 
B)  $3,267.99 
C)  $4,157.46 
D)  $5,800.79 
A)  $2,463.66 
B)  $3,267.99 
C)  $4,157.46 
D)  $5,800.79

Question 11

An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above. What is the present value of Option C?

Accepted Answer

A)  $2,763.64 
B)  $3,662.44 
C)  $4,516.80 
D)  $5,800.79 
A)  $2,763.64 
B)  $3,662.44 
C)  $4,516.80 
D)  $5,800.79

Question 12

Consider the following two options. You can either invest $30,000 in a bank that offers you an interest rate of 6 percent compounded annually for 30 years, or you can lend $30,000 to your friend for 30 years at an interest rate of 10 percent compounded annually.
-Refer to the scenario above. If you invest your money in the bank, you will receive ________ on maturity.

Accepted Answer

A)  $172,304.74 
B)  $898,797.66 
C)  $3,521,725.58 
D)  $4,020,025.01 
A)  $172,304.74 
B)  $898,797.66 
C)  $3,521,725.58 
D)  $4,020,025.01

Question 13

Trinity deposits $8,000 in a bank at an interest rate of 8 percent per year compounded annually.
-Refer to the scenario above. What will be the future value of the deposit after 2 years?

Accepted Answer

A)  $8,761.20 
B)  $8,990.40 
C)  $9,000 
D)  $9331.20 
A)  $8,761.20 
B)  $8,990.40 
C)  $9,000 
D)  $9331.20

Question 14

An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above. If the investor plans to invest a sum of $4,000, the net present value of Option C is ________.

Accepted Answer

A)  -$1,236.36 
B)  -$337.56 
C)  $516.80 
D)  $1,800.79 
A)  -$1,236.36 
B)  -$337.56 
C)  $516.80 
D)  $1,800.79

Question 15

What is the present value of $50,000 to be received after 1 year if the market rate of interest is 8 percent per year?

Accepted Answer

A)  $44,110.98 
B)  $44,322.87 
C)  $46,296.30 
D)  $48,376.21 
A)  $44,110.98 
B)  $44,322.87 
C)  $46,296.30 
D)  $48,376.21

Question 16

Wendy and John each deposit $2,000 in a bank account at different rates of interest. Wendy receives interest on her deposit at an annual rate of 6 percent, while John receives interest at an annual rate of 9 percent.
-Refer to the scenario above. What will be the future value of Wendy's deposit after 1 year?

Accepted Answer

A)  $2,110 
B)  $2,120 
C)  $2,360 
D)  $2,400 
A)  $2,110 
B)  $2,120 
C)  $2,360 
D)  $2,400

Question 17

An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above. If the investor plans to invest a sum of $4,000, the net present value of Option B is ________.

Accepted Answer

A)  -$1,536.34 
B)  -$2,322.12 
C)  $157.46 
D)  $1,800.79 
A)  -$1,536.34 
B)  -$2,322.12 
C)  $157.46 
D)  $1,800.79

Question 18

What is the present value of $10,000 to be received after 1 year if the current annual rate of interest is 6 percent?

Accepted Answer

A)  $8,644.26 
B)  $8,922.34 
C)  $9,433.96 
D)  $10,000 
A)  $8,644.26 
B)  $8,922.34 
C)  $9,433.96 
D)  $10,000

Question 19

Tom has two investment options. He can either invest $3,000 in a friendʹs project or he can deposit the same amount in a bank that offers him an annual rate of interest of 6 percent. If he invests in his friendʹs project, he will receive $3,400 after 5 years.
-Refer to the scenario above. What is the net present value of his friend's project?

Accepted Answer

A)  -$459.32 
B)  -$666.21 
C)  $534.66 
D)  $616.21 
A)  -$459.32 
B)  -$666.21 
C)  $534.66 
D)  $616.21

Question 20

A box has three green balls, six blue balls, and nine red balls.
-Refer to the scenario above. What is the probability of picking a green ball from the box?

Accepted Answer

A)  12.83 percent 
B)  16.67 percent 
C)  24.75 percent 
D)  32.35 percent 
A)  12.83 percent 
B)  16.67 percent 
C)  24.75 percent 
D)  32.35 percent

What is the discounted value of $60,000 to be received after 6 years if the ongoing rate of interest is 6 percent per year?

A box has three green balls, six blue balls, and nine red balls. -Refer to the scenario above. What is the probability of picking a blue ball from the box?

An investment of $20,000 offers a return of $15,000 in 10 years and another return of $15,000 after 15 years. The market rate of interest is 6 percent per year. -Refer to the scenario above. What is the net present value of the investment?

A bag contains ten green balls, five blue balls, and fifteen yellow balls. If an individual picks a green ball from the bag, she wins $200. If she picks either a blue ball or a yellow ball, she loses $300. -Refer to the scenario above. What is the expected value of the game?

Trinity deposits $8,000 in a bank at an interest rate of 8 percent per year compounded annually. -Refer to the scenario above. What will be the future value of the deposit after 2 years?

What is the present value of $50,000 to be received after 1 year if the market rate of interest is 8 percent per year?

What is the present value of $10,000 to be received after 1 year if the current annual rate of interest is 6 percent?

A box has three green balls, six blue balls, and nine red balls. -Refer to the scenario above. What is the probability of picking a green ball from the box?

Economic Methods and Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

Consumers and Incentives,the Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Sellers and Incentives,aggregate Incomes

Perfect Competition and the Invisible Hand, Economic Growth

Trade and Why Isnt the Whole World Developed

Externalities and Public Goods, Employment and Unemployment

The Government in the Economy: Taxation and Regulation, Credit Markets

Markets for Factors of Production and the Monetary System

Monopoly and Short-Run Fluctuations

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Social Economics and Auctions and Bargaining

Web: Financial Decision Making

Web: Economics of Life, Health, and the Environment

Web: Political Economy

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Exam 13: Trade-Offs Involving Time and Risk and Open Economy Macroeconomics

What is the discounted value of $60,000 to be received after 6 years if the ongoing rate of interest is 6 percent per year?

A box has three green balls, six blue balls, and nine red balls. -Refer to the scenario above. What is the probability of picking a blue ball from the box?

An investment of $20,000 offers a return of $15,000 in 10 years and another return of $15,000 after 15 years. The market rate of interest is 6 percent per year. -Refer to the scenario above. What is the net present value of the investment?

A bag contains ten green balls, five blue balls, and fifteen yellow balls. If an individual picks a green ball from the bag, she wins $200. If she picks either a blue ball or a yellow ball, she loses $300. -Refer to the scenario above. What is the expected value of the game?

Trinity deposits $8,000 in a bank at an interest rate of 8 percent per year compounded annually. -Refer to the scenario above. What will be the future value of the deposit after 2 years?

What is the present value of $50,000 to be received after 1 year if the market rate of interest is 8 percent per year?

What is the present value of $10,000 to be received after 1 year if the current annual rate of interest is 6 percent?

A box has three green balls, six blue balls, and nine red balls. -Refer to the scenario above. What is the probability of picking a green ball from the box?

Economic Methods and Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

Consumers and Incentives,the Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Sellers and Incentives,aggregate Incomes

Perfect Competition and the Invisible Hand, Economic Growth

Trade and Why Isnt the Whole World Developed

Externalities and Public Goods, Employment and Unemployment

The Government in the Economy: Taxation and Regulation, Credit Markets

Markets for Factors of Production and the Monetary System

Monopoly and Short-Run Fluctuations

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Social Economics and Auctions and Bargaining

Web: Financial Decision Making

Web: Economics of Life, Health, and the Environment

Web: Political Economy

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