If the annual interest rate is 10, the net present value of ...

[saraeharris]

If the annual interest rate is 10, the net present value of receiving 550 in the next year is:
 a. 550
  b. 551
  c. 549
  d. 500

Question 2

Hardcover Books The marginal cost of printing a typical hard cover novel is 12.00 while the same book in paperback has a marginal cost of 2.00 lower. So why do publishers charge an average of 15 more for hard cover books?

[Jsherida]

Answer to Question 1

a

Answer to Question 2

Hard cover versus paperback is used as a price discrimination scheme. Paperback versions usually come many months after the hard cover version. Customers who really like a particular author are more demand inelastic and tend to be impatient for the next book. This way the publishers can extract a higher price from the inelastic customers before they charge a lower price to the more elastic segment of demand.

[saraeharris]

TYSM

[brbarasa]

Gracias!