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Suppose You Were Given a Gift of a Gold Mine

Question 14

Multiple Choice

Suppose you were given a gift of a gold mine that generates $1,000 of net income every year, indefinitely. And suppose the equilibrium rate of interest is 5 percent. What is the present value of that gold mine?


A) $20,000
B) $5,000
C) $50,000
D) $500,000
E) $10,000

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