ECON 102 Quiz 3 (ECON_102)
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ECON 102 Quiz 3
- Exam (elaborations) • 7 pages • 2021
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ECON 102 Quiz 3. Suppose that the real return on assets is 4% forever. Approximately what
is it worth to have a gift from your grandparents when you are young
that pays $2000 a year until you die:
a. About $2,000
b. About $5,000;
c. About $120,000 if you expect to live for another 60 years;
d. About $20,000
e. About $8,000
f. About $50,000
Solution: The present value of the sum of all money to be received in the
future on this “perpetuity” is given by $2,000 / 0.04 = $50,000
2) Ac...
Exam (elaborations)
ECON 102 Quiz 3
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ECON 102 Quiz 3. Suppose that the real return on assets is 4% forever. Approximately what is it worth to have a gift from your grandparents when you are young that pays $2000 a year until you die: a. About $2,000 b. About $5,000; c. About $120,000 if you expect to live for another 60 years; d. About $20,000 e. About $8,000 f. About $50,000 Solution: The present value of the sum of all money to be received in the future on this “perpetuity” is given by $2,000 / 0.04 = $50,000 2) Ac...
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