Determine whether this offer can be of any value

Assignment Help Microeconomics
Reference no: EM13963068

Read the following letter from a magazine publisher: Dear Parent: Currently your Growing Child/Growing Parent subscription will expire with your 24-month issue. To renew on an annual basis until your child reaches 72 months would cost you a total of $63.84 ($15.96 per year). We feel it is so important for you to continue receiving this material until the 72nd month, that we offer you an opportunity to renew now for $57.12. Not only is this a savings of 10% over the regular rate, but it is an excellent inflation hedge for you against increasing rates in the future. Please act now by sending $57.12.

(a) If your money is worth 6% per year, determine whether this offer can be of any value.

(b) What rate of interest would make you indifferent between the two renewal options?

Reference no: EM13963068

Questions Cloud

Steps to managing accounts receivable : Examine the five (5) steps to managing accounts receivable. Select the one you determine to be the most vulnerable to fraud. Discuss this step and why this vulnerability exists.
Write the chemical reaction for the formation of gas : Write the chemical reaction for the formation of gas. What are the products of the reaction? Write chemical compounds' formula and name each product?
What is the necessary and sufficient condition : Prove the following statement: "If n is an integer, then n2has remainder 0 or 1 upon dividing by 3". Write the negation (in words) of the following claim: "If Jack and Jill climb up the hill, then they fall down and like pails of water".
Develop a full capital budgeting plan for project : Assume that you have just been hired as a financial consultant to a startup company that plans to introduce a new beverage to the soft drink market. Your company's product is advertised as a healthier alternative to soda and other artificially fla..
Determine whether this offer can be of any value : Not only is this a savings of 10% over the regular rate, but it is an excellent inflation hedge for you against increasing rates in the future. Please act now by sending $57.12. If your money is worth 6% per year, determine whether this offer can b..
Write about types of market efficiency : Select one of the following forum topics to research and write about- Efficient capital markets, Types of market efficiency and Behavioral finance and market efficiency
Write about dividend policy : Forum Topic Responses: One comprehensive forum topic is assigned weekly. Students are required to research their selected forum topic, Select one of the following forum topics to research and write about- Dividend policy
How much will this account be worth at that time : For the last 19 years, Mary has been depositing $500 in her savings account , which has earned 5% per year, compounded annually and is expected to continue paying that amount. Mary will make one more $500 deposit one year from today. If Mary close..
What is the pv of the cash flows : You own a natural gas pipeline that will generate a $2 million cash return over the coming year. What is the PV of the cash flows if the pipeline is scrapped after 20 years

Reviews

Write a Review

Microeconomics Questions & Answers

  Determine the dollar value of incremental benefits

Suppose the federal government is considering an air quality policy initiative that would effectively increase abatement (A) of ozone from 10 percent to 20 percent and that the marginal social benefit (MSB) of ozone abatement in millions of dollar..

  What are the pros and cons of the options

In the late 1990s, several East Asian economies had their currencies pegged to the U. S. dollar. Suppose there is an economic boom in the United States that leads to an increase in U. S. interest rates.

  Why is the typical hypothesis

In multiple regression analysis, why is the typical hypothesis that analysts want to test is whether a particular regression coefficient (B) is equal to zero versus whether that coefficient is not equal to zero?

  Complete the following tablenumber of workerstotal

complete the following tablenumber of workerstotal outputtotal productmarginal product of laboraverage product of

  Write down the effects of innovation and technology on cost

what are the effects of innovation and technology on the cost of production? how does technology affect market

  What would efficient revenue management imply

What would efficient revenue management imply for the pricing of the Cowboys Stadium parking lot on typical game days? How about for the Super Bowl? How about for the many smaller events that fill less than half the lot?

  The change in the consumption of good x due to the change

The change in the consumption of good X due to the change in the price of good X while holding the consumer’s utility level constant at the original level of satisfaction.

  Calculate the elasticity of fx with respect to ur

Calculate the elasticity of FX with respect to UR

  Comment on given question using concept of the elasticities

The question relates to Economics, particularly Micro-economics and it is discuss about the question about booming products during recession such as pancake mixes, spam, beans, rice and instant potatoes.

  How mcuh is the balanced-budget multiplier

Suppose the federal government needs to balance the budget, which means that when the government spending increases, taxes must increase equally. In this case, government spending multiplier is called the balanced-budget multiplier, defined as the..

  What is maximum investment that will be allowed for dike

A state government is considering construction of a flood control dike having a life span of 12 years. History indicates that a flood occurs every four years, on average, and causes $500,000 in damages on each occasion. If the state uses a MARR of 12..

  How to use subscripts to differentiate the two women

For this question, you are to draw two of these alternate graphs. The first graph should show the situation for two women who have access to the same market wage rate, but one chooses to work in the market (an interior solution)

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd