Author Question: Capital AccumulationSuppose you lend 10,000 to a friend for a year. In that year, the real rate of ... (Read 492 times)

xsk4r3kr0w · **on:** Nov 23, 2022

Question 1

Financial Markets

You are considering buying a machine that costs $1,211.79. If purchased, the machine yields the income stream shown in the table for the next 7 years.

Year	Income
1	485
2	275
3	390
4	330
5	0
6	0
7	0

Would you buy the machine if the interest rate was 8%? 10%?
◦ no, no
◦ no, yes
◦ yes, no
◦ yes, yes

Question 2

Capital Accumulation

Suppose you lend 10,000 to a friend for a year. In that year, the real rate of return in the stock market is 4%. What is the minimum amount your friend needs to pay you back to make the loan worthwhile?
Please round your final answer to two decimals.
◦ $10,400.00
◦ $20,000
◦ $9,600.00
◦ $10,000

labrinker · **Reply #1 on:** Nov 23, 2022

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