A kind and caring politician offers to pay you $500 million in 300 short years. Because this
Question:
A kind and caring politician offers to pay you $500 million in 300 short years. Because this politician is from the political party you vote for, you believe that the amount will be paid with certainty.
a. How much is this promise worth today if the appropriate discount rate is 10%?
b. How much is this promise worth today if the appropriate discount rate is 0%?
c. Explain why your answer to B, while mathematically correct, does not make sense in reality. In your (short) answer, include 2 reasons why interest rates are positive.
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
a We have n 300 and FV 500000000 and I 10 Present value FV 1 I n 50000000...View the full answer
Answered By
Douglas Makokha
Unlock Academic Success with Dedicated Tutoring and Expert Writing Support!
Are you ready to excel in your academics? Look no further! As a passionate tutor, I believe that dedication and hard work are the keys to achieving outstanding results. When it comes to academics, I strive to provide nothing but the best for every student I encounter.
With a relentless thirst for knowledge, I have extensively researched numerous subjects and topics, equipping myself with a treasure trove of answers to tackle any question that comes my way. With four years of invaluable experience, I have mastered the art of unraveling even the most intricate problems. Collaborating with esteemed writers has granted me exclusive access to the trade secrets utilized by the industry's top professionals.
Allow me the pleasure of assisting you with your writing assignments. I thrive on challenges and will guide you through any obstacles you may face. Together, we will unlock your academic potential and pave the way for your success.
60+ Reviews
340+ Question Solved
Related Book For 
Question Posted:
