Suppose you were interested in buying the New York Yankees. If the Yankees generated an annual income of $30 million and if the rate of interest was 10 percent, what would be the present value of the New York Yankees? If the rate of interest fell to 5 percent, would you have to pay more, less, or the same for the team? Explain.
Answer to relevant QuestionsWinning an Olympic gold might generate more gold than the medal. Explain. Calculate, using the following table, the missing rates of interest, annual revenues, and present values. Use appropriate percentages to fill in the blank cells of the table that represents a set of data for a Lorenz curve. Describe the phases of the business cycle. In what ways is the business cycle illustrated in Exhibit 1 like a roller-coaster ride? In what ways is it different? Calculate the real GDP for the following years for the Australian economy, given data for nominal GDP and the GDP deflator (2001 is the base year).
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