# Use economic equivalence to determine the amount of money or value of i that makes the following

## Question:

Use economic equivalence to determine the amount of money or value of i that makes the following statements correct.

(a) $5000 today is equivalent to $4275 exactly 1 year ago at i = ___% per year.

(b) A car that costs $28,000 today will cost $____ a year from now at i = 4% per year.

(c) At i = 4% per year, a car that costs $28,000 now, would have cost $____ one year ago.

(d) Last year, Jackson borrowed $20,000 to buy a preowned boat. He repaid the principal of the loan plus $2750 interest after only 1 year. This year, his brother Henri borrowed $15,000 to buy a car and expects to pay it off in only 1 year plus interest of $2295. The rate that each brother paid for his loan is ___ % for Jackson and ___ % per year for Henri.

(e) Last year, Sheila turned down a job that paid $75,000 per year. This year, she accepted one that pays $81,000 per year. The salaries are equivalent at i = ____% per year.

## Step by Step Answer:

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