Author Question: What is the value of an asset which pays 200 a year for the next 5 years and can be sold for 1,500 ... (Read 88 times)

mckennatimberlake · **on:** Jul 11, 2018

What is the value of an asset which pays 200 a year for the next 5 years and can be sold for 1,500 at the end of five years from now? Assume that the opportunity cost is 10 percent.

What will be an ideal response?

Question 2

Government can obtain funds ________.

A) by trading in equity market
B) by issuing financial instruments such as futures and options
C) through forex market
D) by selling debt securities

alexanderhamilton · **Reply #1 on:** Jul 11, 2018

Answer to Question 1

Using Financial calculator: FV=1500, PMT=200, N=5, I=10, CPT PV = -1689.54
The value of the asset = 1,689.54.

Answer to Question 2

D