What is the present value of $400 to be paid in three years if the interest rate is 20%?PV = $231.48 (Round your response to two decimal places.) Calculate the present value of a $1,300 discount bond with 6 years to maturity if the yield to maturity is 5%.The present value is $ (Round your response to two decimal places.)

Present worth is the current worth of the future sum of money, at a particular rate of return. The…

Answered: What is the present value of $400 to be…

What is the present value of $400 to be paid in three years if the interest rate is 20%? PV = $231.48 (Round your response to two decimal places.)

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: The Basic Tools Of Finance

Section9.1: Present Value: Measuring The Time Value Of Money

Problem 1QQ

See similar textbooks

Related questions

Q: In a competitive market, if price is higher than the equilibrium price then the quantity demanded…

A: The competitive market is defined as the marketplace where a large number of sellers and consumers…

Q: Please no written by hand and no image Use the table to answer the question. Nominal GDP GDP…

A: GDP refers to the final values of goods and services produced in a territory of a country in a given…

Q: The demand and supply of movie tickets are given by Q D = 10 – 2P and Q S = 2P – 6, where P is the…

A: Demand equation for movie tickets: Supply equation for movie tickets: The equilibrium price of a…

Q: The demand for meat pies is given by Qd = 60,000 – 10,000P. The current price for meat pies is…

A: Revenue maximisation refers to the process through which a business or production makes the maximum…

Q: Follows-up: Question a), is it independent that purchase has been made in a tax free place, is it…

A: Gross Domestic Product (GDP) is a key economic indicator that measures the total monetary value of…

Q: A paper manufacturing company has recently acquired a new machine with a useful life of six years.…

A: To determine the initial amount that the company should deposit into the maintenance fund today, we…

Q: Using what you know about the Phillips curve, determine whether the following quantities will…

A: The Phillips Curve is a graphical and economic concept that represents the relationship between…

Q: Suppose the public expects a 7 percent inflation rate, while the Federal Reserve unexpectedly allows…

A: Inflation rate refers to the rate at which the average price level in the economy rises. There are…

Q: The macroeconomic environment affects corporate performance, but the degree depends on the business…

A: Macroeconomics is a branch of economics that focuses on the study of the overall economic…

Q: You are planning to open an internet business selling stock market analysis, and are offering two…

A: The strategy a business uses to turn a profit is referred to as its business model. It lists any…

Q: Suppose that AT&T and Verizon cell phone plans are considered substitutes. Ceteris paribus, if there…

A: Substitute goods are defined as goods that can be used in place of one another. If the price of one…

Q: On Aug 28, 2023 the Factory Efficiency Index (FEI) closed at 10,572.02; the day before it closed at…

A: The factory efficiency index is defined as an index that is used to measure the efficiency level of…

Q: Assess the arguments for and against inflation targeting. Has it been a successful policy for…

A: Inflation targeting is a monetary policy framework that central banks use to manage inflation within…

Q: Suppose you start saving for retirement when you are 45 years old. You invest $4,000 the first year…

Q: If Mexicans increasingly lose confidence in their domestic financial markets and move their assets…

A: The value of a currency, also known as its exchange rate, represents the rate at which one currency…

Q: Describe the characteristics of fiscal policy in the Great Recession. Was it expansionary or…

A: The Great Recession was a severe economic downturn that began in December 2007 and ended in June…

Q: Times for a surgical procedure are normally distributed. There are two methods. Method A has a mean…

A: (a)The mean time for method A is 28 minutes, and the standard deviation is 6 minutes. This means…

Q: Normally, monopolies charge the same price to all customers. But sometimes they are able to charge…

A: The monopoly market is defined as a single market characterized by one buyer and seller. There is no…

Q: Suppose that Germany can produce at most 150 cars or 50 tractors per month. France can produce at…

A: Opportunity cost is a fundamental concept in economics that refers to the value of the next best…

Q: Given a demand curve of P = 144 - 2Qd and supply of P = 45 + 3Qs, find the equilibrium price (Pe),…

A: When input costs for producing a good decrease or lower input costs, it tends to lead to an increase…

Q: Consider the following diagram showing two supply curves, S₁ with more pollution and S₂ with less…

A: A supply curve depicts the positive relationship between price and quantity supplied, keeping other…

Q: b. Which of the following statements is true? O Producing more than equilibrium leaves unrealized…

A: The consumer surplus refers to the difference between what a consumer is willing to pay and what…

Q: 20 18 16 14 12 10 8 6 4 2 10 20 30 40 50 60 70 80 quantity Refer to Figure 6-6. If the government…

A: Price floor refers to a legal minimum price that can be charged for a good. It is set above the…

Q: Can you please show me a diagram of aggregate expenditure (AE) model with potential effects of an…

A: The present value of all the finished goods and services produced in an economy is the aggregate…

Q: determine how U.S. interest rates reacted to this announcement, use the FRED database at the link…

A: More than 816,000 economic time series from various sources can be found in the Federal Reserve…

Q: Questions What is a Labor Union? How does a Labor Union work? Why might a Labor Union be necessary?…

A: What is a Labor Union?A labor union is an organization of workers who unite to make decisions about…

Q: Refer to the figure below. a. Use the figure to calculate the income elasticity of demand when…

A: Income elasticity of demand tells how much sensitive is quantity demanded to income change.Income =%…

Q: In the market for cars, the price elasticity of supply is +1.5, and the price elasticity of demand…

A: We know that the price elasticity of supply is +1.5, which means that the percentage change in…

Q: Given a demand curve of P = 165 - 6Qd and supply of P = 65 + 5Qs, find the equilibrium price (Pe),…

A: The demand curve shows an inverse relationship between price and quantity demanded, ceteris…

Q: Assume that Sardi and Tinaka can switch between producing corn and producing pork at a constant…

A: Bushels of Corn Pound of Pork Sardi2012Tinaka1510

Q: What are the differences between NAFTA and USMCA? First, explain very briefly what these are, and…

A: NAFTA, or the North American Free Trade Agreement, was signed into law in 1994 by the United States,…

Q: For the cash flows shown in the diagram, determine the value of x and 2x that will make the future…

A: Cash flow refers to the movement of money in and out of a business, investment, or individual's…

Q: According to the figure, what share of the per unit tax on Direct TV programming is paid by the…

A: Equilibrium in the market occurs at the intersection of demand and supply curves where quantity…

Q: Given the following consumption function C = $450 + 0.8(Yd), autonomous consumption is equal to…

A: Consumption, in the context of economics, refers to the act of using or expending goods and services…

Q: "No firm is completely sheltered from rivals; all firms compete for the consumer dollars. If that…

A: The fundamental concepts surrounding the notion of a "pure monopoly" are dissected. A pure monopoly…

Q: Let A be an m x n matrix representing the payoff of n securities in m states of the world. If the…

A: The number of elements 'm' rows and 'n' columns, with the rectangular array, being the m x n matrix.…

Q: How can you make money from waste? what occupation it can give to people?

A: The field of economics that focuses on the study of the relationship between the environment and the…

Q: Question: For each of the following tort rules, (i) construct a table describing the individuals'…

A: Under the negligence rule with efficient legal standard of care, the defendant is liable for damages…

Q: What would be the effect of an unexpected increase in the price of oil on a graph showing aggregate…

A: An unexpected increase in the price of oil will increase the cost of production for many firms. This…

Q: Suppose the International Olympic Committee announced that it would hold all of its Summer Games in…

A: Suppose the International Olympic Committee announced that it would hold all of its Summer Games in…

Q: Use the letters in the graph below to answer this question letter or letters representing each area…

A: Consumer surplus is the area below demand and above price. Producer surplus is the area below price…

Q: Suppose you are the marketing manager for Fruit of the Loom. An individual's inverse demand for…

A: Demand is the quantity of commodity that a consumer is willing and able to buy, at each possible…

Q: Suppose the domestic supply (Q) and demand (QD) for skateboards in the United States is represented…

A: Producer surplus: Producer surplus is the benefits that the sellers receive by selling products in…

Q: PRICE (Delars per tor 24 12 Demand 24 QUANTITY (Thousands of tons) Supply 40 Demand Supply Several…

A: Price elasticity of demand(PED) often referred to as simply "elasticity," is a fundamental concept…

Q: On the previous graph, use the green rectangle (triangle symbols) to indicate the domestic revenue…

A: A tariff is a tax imposed by one country on the goods and services imported from another country to…

Q: COVID-19 brought global economic and financial ramifications that were felt through global supply…

A: Reshoring:Reshoring refers to the process of bringing back manufacturing or production activities…

Q: A war breaks out that is widely expected to last only one year. Show how the effect of this shock on…

A: The intertemporal substitution impact is the shift in real GDP demand brought on by changes in the…

Q: Ethical Dilemma: American International Group (AIG) is the largest insurance company in the United…

A: An ethical dilemma is described as a situation where a person is given with options but it violates…

Q: A rightward shift in the demand curve for product C might be caused by a(n): A. decrease in income…

A: Demand refers to the total quantity of goods or service that a consumer is willing and able to buy…

Q: 11

A: Market equilibrium can be described as the point where the demand and supply curves interesect each…

Question

What is the present value of $400 to be paid in three years if the interest rate is 20%?
PV = $231.48 (Round your response to two decimal places.)

Calculate the present value of a $1,300 discount bond with 6 years to maturity if the yield to maturity is 5%.
The present value is $ (Round your response to two decimal places.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Defining the term present value or worth

VIEW

Step 2: Calculation of present value (PV)

VIEW

Step 3: Calculation of present value (PV)

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What is the yield to maturity on a simple loan of $35,000 that requires a repayment of $40,000 in 3 years?
If the interest rate is 7.0%, what is the present value of a perpetuity paying $210 per year? (A perpetuity is a bond that makes payments forever.) Round to the nearest dollar. Do not use dollar signs or commas in your answer. Example: if the answer is $1,234.56, then write "1235"
A bond pays $1000 in 5 years an earns an annual interest rate of 2.75%. What is the bond's price? Assume annual compounding. Round your answer to two decimal places.
Consider a coupon bond that has a $1.000 par value and a coupon rate of 9%. The bond is currently selling for $1,150 and has 9 years to maturity. What is the bond's yield to maturity?
On September 12, Jody Jansen went to Sunshine Bank to borrow $2,600 at 10% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. (Use Days in a year table) What interest will Jody owe on January 27? Note: Do not round intermediate calculations. Round your answer to the nearest cent. What is the total amount Jody must repay at maturity? Note: Do not round intermediate calculations. Round your answer to the nearest cent.
Q3: You may have already won $2 millions. You will receive $100,000 per year for 20 years. Suppose you are considering the following two options: First Choice: You save your winning for the first 7 years and then spend every cent of the winning in the remaining 13 years Second Choice: You do the reverse, spending for 7 years and then saving for 13 years If you can save wining at 7% interest, how much would you have at the end of 20 years and what interest rate on your saving will make the two options equivalent ?
An investment of $2658 is made at the beginning of each month for 4 years and 11 months. How much will the investment be at the end of the term, if interest is 5% compounded monthly? Round your answer to 2 decimal places.
8. An effective rate of interest, which is 12.75%, is equivalent to what percent if compounded continuously.
Showing your working out, compute the price of all four bonds: Face Value Maturity (years) Yield Frequency of yield Coupon rate Frequency of coupon Bond 1 £1000 3 3% semi-annual 8% semi-annual Bond 2 £1000 4 3% quarterly 4% semi-annual Bond 3 £100 2 2% monthly 3% quarterly Bond 4 £100 5 3% monthly 4% semi-annual
June has a small house, on a small street, in a small town. If she sells the house now, she will likely get $110, 000 for it. If she waits one year, she will probably receive more- say, $120,000. If she sells the house now, she can invest the money in a 1-year guaranteed growth bond that pays 8% annual interest, compounded monthly. What are the 2 options worth, and which should she choose?
How much money will you have in seven yearsif you deposit $7,000 in the bank at 8.5% interestcompounded daily?
Ben Franklin's gift of $3,000 to New York City grew to $2,000,000 in 200 years. At what interest rate compounded annually would this growth occur? The interest rate would be %. (Round to the nearest hundredth.)