Present discounted values (I): Compute the present discounted value of the following income streams. Assume the interest rate is 3%. 1. S50,000, received 1 year from now. 2. $50,000, received 10 years from now. 3. S100 every year, forever, starting immediately. 4. S100 every year, forever, starting 1 year from now. 5. S100 every year for the next 50 years, starting immediately.
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- A consumer's current income (y) is 200 and the future income ( t.') is 240. A current lump sum tax (t) of 10 is paid and the tax in the next period (t') is 15. The real interest rate is 20% for each period. Please assume that current and future consumption are complements. and the consumer always prefers to have one unit of current consumption and two units of consumption in the future.Calculate the consumer's lifetime wealth.Calculate the optimal current and future consumption and the optimal current and future savings. Is the consumer a lender or a borrower? How does he she. as a lender or a borrower. affect the future consumption?Harper is a short-lived human who only lives for two years: current year and next year. In the current year, Harper has an income of $189 and has to pay $36 in taxes. Harper expects that he can receive an income of $132 and has to pay $27 in taxes next year before he dies. The real interest rate between current and next year is 7%. What is Harper's lifetime wealth (in $)? Round your answer to at least 2 decimal placesSuppose Tom is 20 years old. He works till 50 years old, retire, and live up to 80 years old. While working, Tom's job pays a month income of $2000/month. There's no income or pension after retirement. (Also ignore any medical expense or existing debt). If beta=1 and i=0%, then Tom's month spending = $______/month. Hint: you can calculate how many years Tom will be earning the income, and how many years Tom need to spend the income.
- Dr. Smith, a new professor, makes $85,000 his first year. He is guaranteed 7 years of employment at the university. Each year his salary increases at a rate of 8 percent. The interest rate is 5 percent. Show Dr. Smith’s discounted stream of earnings over this seven- year period and use these figures to calculate the present value.Cindy takes a summer job and earns an after-tax income of $8,000. Her living expenses during the summer were $2,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. Cindy's saving during the summer is $9 The change in Cindy's wealth is $0. Nez#3 . Assume an economy with 1000 consumers. Each consumer has income in the current period of 50 units and future income of 60 units, and pays a lump-sum tax of 10 in the current period and 20 in the future period. The market real interest rate is 8%. Of the 1000 consumers, 500 consume 60 units in the future, while 500 consume 20 units in the future. (a) Determine each consumer’s current consumption and current saving. (b) Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and the quantity of debt issued by the government in the current period.
- Suppose a person lives for 4 periods. His salary during each period of his life is $30, $60, $90 and $0. He was born without any financial wealth. 1. If the interest rate is 8% per period, what is the present value of the income of this agent? 2. If the individual wishes to have a constant consumption during his life, what will it be? Deduct his level of savings during each of the 4 periods of his life. 3. Suppose our individual cannot borrow (but can save). Determine the consumption and savings profile of the individual. 4. Suppose our individual receives an inheritance at birth of $10. How your answer in c) be affected?Frank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a real return of 4 percent per year. Instructions: Enter your responses as whole numbers. a. The CPI (times 100) is 100 at the time that Frank makes the loan. It is expected to be 109 in one year and 118.8 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be %. b. Suppose Frank and Sarah are unsure about what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 4 percent rate of return? Frank should charge Sarah % (Click to select) more than equal to less than the inflation rate.10. What is the present value of a perpetuity of $100 if the appropriate discount rate is 7%? If interest rates in general were to double and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity?
- The interest rate is 6 percent a year and you expect to receive $1,000 next year and the following year. What is the present value of $1,000 to be received next year? What is the present value of $1,000 tobe received in two years? The present value of $1,000 to be received next year is $ ____. >>>>Answer to 2 decimal places.Cindy takes a summer job and earns an after-tax income of $5,000. Her living expenses during the summer were $1,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. Cindy's saving during the summer is $Cindy takes a summer job and earns an after-tax income of $4,500. Her living expenses during the summer were $1,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. .... Cindy's saving during the summer is $ The change in Cindy's wealth is $.