Level of interest rate, Econometrics

You have won a contest and are allowed to choose between two prizes. One option is to receive $200 now and another $200 a year from now. The second option is $150 now and $255 a year from now.

(i) At what level of interest rate (if any) is the present value of the two prizes identical?

(ii) If the actual interest rate is below the number you found in your answer above, which of the two options is characterized by higher present value? Explain.

Posted Date: 4/1/2013 3:48:39 AM | Location : United States







Related Discussions:- Level of interest rate, Assignment Help, Ask Question on Level of interest rate, Get Answer, Expert's Help, Level of interest rate Discussions

Write discussion on Level of interest rate
Your posts are moderated
Related Questions
1. What are the two roles that prices play in a competitive economy? How are these two roles related to the Fundamental Theorems of Welfare Economics? 2. The Undercover Economis

What trends do you see in the Economic, Political, and Cultural environment of society that will affect the industry in the future? Answer) The trends that will affect the indus

verify Leibniz rule for differentiation under the integral sign for the following function 2x^2+3xy+3y^2

The following table contains the ACT scores and the GPA (grade point average) for eight college students. Grade point average is based on a four-point scale and has been rounded to

QM2 Econometric Project As part of the course requirements you have to undertake an econometric evaluation of an economic issue using data that you have gathered either from the ho

Given for a closed economy: C = $20 + 0.50Y D           I = $40           G = $10           Y D = Y- T 0           T 0 = $5 Determine:  (a)  the equilibrium

Assume the following table gives the joint PDF (probability distribution function, not Adobe document!!) of two discrete variables, x and Y.                                  Vari



A store is known for is bargains. The store has the habit of lowering the price of its bargains each day, to ensure that articles are sold fast. Assume that you spot an item on Wed