EC102_-_Ch_8_Saving_and_Investment_Quest

EC102_-_Ch_8_Saving_and_Investment_Quest - 1 1...

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55582ec49ff361b61b76d6f2ce46865be078c103.doc 1 1. Susan puts \$125 into an account and one year later has \$135; what was the interest rate? 2.  What is the present value of a payment of \$150 one year from today if the interest rate is 6  percent? 3. Calculate the future value for of each of the following in Table 1.  (Interest rate is an annual interest rate) Table 1 Present Value Interest Rate Term Future Value \$100  0.02 1 \$125  0.03 2 \$150  0.04 3 \$175  0.05 4 \$200  0.06 5 \$225  0.07 6 \$250  0.08 7 \$275  0.09 8 \$300  0.10 9 \$325  0.11 10 \$350  0.12 11

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55582ec49ff361b61b76d6f2ce46865be078c103.doc 2 4.  Calculate the present value of each of the following in Table 2.  Note, the relation between  the length of the term and the present value. Table 2 Future  Value Interest  Rate Term Present Value \$1,000  0.075 1 \$1,000  0.075 2 \$1,000  0.075 3 \$1,000  0.075 4 \$1,000  0.075 5 5. Explain why the demand for loanable funds slopes downward and the supply of loanable
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This note was uploaded on 04/06/2012 for the course ECON 102 taught by Professor ? during the Spring '08 term at Waterloo.

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EC102_-_Ch_8_Saving_and_Investment_Quest - 1 1...

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