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- Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is this fear true? Does a high risk mean the return must be low?An annuity is set up that will pay $1,700 per year for ten years. What is the present value (PV) of this annuity given that the discount rate is 6%? OA. $12,512 OB. $7,507 OC. $17,517 OD. $15,014 4Economics Francine, Albert, George and Connie each contributed $3,000 to a spousal RRSP. Which of them will have to report taxable income? 47 O a) Francine, whose spouse, Vic, transferred $3,000 from the spousal RRSP directly to an annuity in his name, The annuity cannot be commuted for three years. O b) Albert, whose spouse left him for another man and withdrew $3,000 from the spousal RRSP the year after it was deposited. O c) Connie, who is now a resident of Greece. Her spouse also is a resident of Greece and he withdrew $3,000 from the RRSP. O d) George, whose common-law partner, Annette, withdrew $1,000 from the spousal RRSP In the following year to purchase a new dishwasher for their house.
- NPV Calculate the net present value (NPV) for the following 12-year projects. on the acceptability of each. Assume that the firm has a cost of capital of 7%. a. Initial investment is $1,000,000; cash inflows are $ 160,000 per Year b. Initial investment is $2,500,000; cash inflows are $320,000 per Year Using Excel to answer. Show all FormulasAssume an economy with 1,000 consumers. Each consumer has income in the current period of 50 units and future income of 60 units and pays a lump-sum tax of 10 units in the current period and 20 units in the future period. The market real interest rate is 8%. Of the 1,000consumers, 500 consumer 60 units in the future, while 500 consumer 20 units in the future. a) Determine each consumer's current consumption and current saving. (b) Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and thequantity of debt issued by the government in the current period. (c) Suppose that current taxes increase to 15 units for each consumer. Repeat parts (a) and(b) and explain your results.Year GPP IncomedfIst Taale Incame of Dnd Tersile Incamedt3rd Terat 1950 atrilao,4Trillion 10.6 Trillion ITrillion doa016Till 0.8 Trillon l2.4 Trillionl 12.8 Trillicn Compute 6PP between 1950 and 2020 A, 1,200%. B. 100 Cil,H00 Y. D. l,600%-
- Jacob manages a cloth manufacturing firm. He is deciding whether or not to invest In new machinery, The machinery costs $45,000 today and is expected to Increase cash lows in the first year by $25,000 and in the second year by $30,000. The firm's accrued fixed costs are $2800. If the interest rate (cost of capital) is 15% then whal is the net present value of the investment? 26.09 O 1840.09 2826.09 -576.56The annual cost to maintain a cemetery plot is $75. If interest is 6% how much must be set asideto pay for perpetual maintenance?a. $1,150b. $1,200c. $1,250d. $1,300Consider a individual who currently earns $20,000 as an unskilled laborer. Suppose that by ttaking courses full time at a communit college for one year, the person can qualify for a more skilled job paying $23,000 that is guaranteed to last for 10 years (after which the person wuld retire). Assume the costt of tuition and books at the community college for one year is $2,000 and that the current interest rate is 6%. Is this a good investment?
- Lewis’s management has been considering movingto a new downtown location, and they are concerned that these plans may come to fruition priorto the equipment lease’s expiration. If the moveoccurs then Lewis would buy or lease an entirelynew set of equipment, so management wouldlike to include a cancellation clause in the leasecontract. What effect would such a clause haveon the riskiness of the lease from Lewis’s standpoint? From the lessor’s standpoint? If you werethe lessor, would you insist on changing any ofthe other lease terms if a cancellation clause wereadded? Should the cancellation clause containprovisions similar to call premiums or any restrictive covenants and/or penalties of the type contained in bond indentures? Explain your answer.. Assume you just deposited $1,000 into a bank account. The current real interest rate is 2%, and infla- tion is expected to be 6% over the next year. What nominal rate would you require from the bank over the next year? How much money will you have at the end of one year? If you are saving to buy a fancy bicycle that currently sells for $1,050, will you have enough to buy it?The present value of a fixed-payment loan is calculated as the, all cash flow payments. of the present value of Select one: O a. log b. sum c. multiple d. difference