hw5_keys.docx - University of the West Department of...

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University of the West Department of Business Administration BUS 202 Principles of Macroeconomics Homework 5 (Chapter 9) Answer Keys Due: Oct 11, 2017 Total: 24 Points Part 1. Handout page 192: Chapter Quick Quiz (12 Points) 1. b 2. d 3. b 4. c 5. c 6. a Part 2. Handout page 194, Problems and Applications (12 Points) 1. (3 Points) How much would the Native Americans have today? Answer: $___________ The future value of $24 invested for 400 years at an interest rate of 7% is (1.07) 400 $24 = $13,600,000,000,000 = $ 13.6 trillion. 2. a. (4 Points) Complete the blanks with “yes” or “no”, then show your steps. Should the firm undertake the project if the interest rate is 11%? Answer: ____no_________ Should the firm undertake the project if the interest rate is 10%? Answer: _____yes________ Show your steps below. 1
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The present value of $15 million to be received in four years at an interest rate of 11% is $15
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