Which of the following alternatives signify the difference between the present value of a 150 perpetuity and 2-year 150 annuity, both discounted at 15 percent per annum.
a. The perpetuity would require an initial investment worth 100 while the annuity would require an initial investment worth 244.07.
b. The perpetuity would require an initial investment worth 1,500 while the annuity would require an initial investment worth 115.07.
c. The perpetuity would require an initial investment worth 1,000 while the annuity would require an initial investment worth 244.07.
d. The perpetuity would require an initial investment worth 100 while the annuity would require an initial investment worth 115.07.
Question 2
If price elasticity is 3.25 then
A) for every one percent change in price, there will be a 3.25 percent change in quantity demanded.
B) for every one percent change in price, there will be a 3.25 percent change in demand.
C) for every one percent change in price, there will be a 32.5 percent change in quantity demanded.
D) for every one percent change in price, there will be a .0325 percent change in quantity demanded.
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