Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $5,000 under each of the following situations:
1. The first payment is received at the end of the first year, and interest is compounded annually.
2. The first payment is received at the beginning of the first year, and interest is compounded annually.
3. The first payment is received at the end of the first year, and interest is compounded quarterly.
Depoosite date: 12/31/17, i=?, n=?, Deposit= $4100, PV - 12/31/16: ?
Deposite date 12/31/18, i=?, n=?, Deposit=$4100, PV -12/31/16: ?
Deposite date: 12/31/19, i=?, n=?, Deposit= $4100, PV- 12/31/16: ?
Deposti date: 12/31/20, i=?, n=?, Depostie= $4100, PV - 12/31/16: ?
Deposit date: 12/31/21, i=?, n=?, deposite=$ 4100, PV - 12/31/16: ?
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Ответ:
Solution :
Annual payment =
1. The rate of interest annually = 12%
Present value
= $ 18,023.90
2. The rate of interest annually = 12%
Present value
= $ 20,186.75
3. The rate of interest annually = 12%
The rate of interest quarterly = 3%
Present value =
Ответ:
2.When the economy is above the potential output level, then the expansionary monetary policy will only create high inflation. This is because of the high output due to LRAS (long run aggregate supply) and so, only the prices will increase causing an inflation.