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# The Time Value of Money

### Maximum Amount of Loans the Bank Can Make

Main Street Bank sets its loans on the basis of a 5% reserve requirement and has \$100 million cash in its vaults. (a) What is the maximum amount of loans the bank can make? (b) If the bank has made loans of \$50 million to real estate firms and is required to keep a 50% reserve requirement against such loans, how does this cha

### Calculating present value of annuity

What is the present value of the following annuities? a. \$2,500 a year for 10 years discounted back to the present at 7 percent b. \$70 a year for 3 years discounted back to the present at 3 percent c. \$280 a year for 7 years discounted back to the present at 6 percent d. \$500 a year for 10 years discounted back to the pres

### nominal rate per year and the effective annual rate

Economic Questions: #1. Company Inc. is planning on taking advantage of an investment opportunity that has an initial cost of \$475K. The annual O & M costs are estimated at \$19K over the useful life of 16 years, at which time, the salvage value is \$80K. Periodic overhauls will be required every 4 years, which are estimat

### Money Multiplier: Target Money Supply

Assume an economy in which the reserve ratio is 15 percent, people hold 10 percent of their deposits in the form of cash, and there are no other leakages. a. Compute the value of the money multiplier. b. If the current level of high-powered money is \$1,500 billion, what is the money supply in this economy? c. How much doe

### What will \$1,130 amount to in 5Years at 5% interest

What will \$1,130 amount to in 5 years at 5% interest? What is the present value of \$10,000 due in 11 years time at 5% compound interest? The power cost of running a pump is \$1,900 per year; determine the present value of this expenditure over 15 years at 6% interest. A machine is purchased for \$50,000 and costs \$30,000 per ye

### Macroeconomics

As an economist, you have been asked to write a letter to a meeting of international professionals to explain the differences between microeconomics and macroeconomics and to provide real-world examples. Please write a letter of 4â?"6 pages including, but not limited to the following: the main differences between microecon

### Reduce work hours during high unemployment times

In the period of high unemployment, people often think that a solution lies in spreading the amount of work more evenly. In Europe for example, many labor unions are proposing that the workweek be reduced so that more people will be a able to have jobs at the reduced hours. Do you agree or disagree with the idea of reducing the

### Finance Example Problems: Security and Brokerage Account

1. What is the present value of a security that will pay \$5,000 in 20 years if securities of equal risk pay 7% annually? 2. You have \$42,180.53 in a brokerage account, and you plan to deposit an additional \$5,000 at the end of every future year until your account totals \$250,000. You expect to earn 12% annually on the accou

### Macroeconomics Test Help

I'm requesting assistance with the below questions in order to prepare for an exam. The course is "Macroeconomics" author: Robert J. Gordon 11th edition text. 29) In the long run, a 1% increase in real GDP tends to a) cause a greater than 1% increase in demand for money b) cause a leass than 1% increase in the demand for

### What are the main differences between microeconomics and macroeconomics?

As an economist, you have been asked to address a meeting of a group of international professionals to explain the differences between microeconomics and macroeconomics and to provide real-world examples. - The main differences between microeconomics and macroeconomics - An example of each phenomenon - A description of a m

### goods and services produced by workers

I) A)Define what is meant by gross domestic product and explain how it is differ from 'net' domestic product , and gross national product ,B) explain and discuss the following four ways of looking at GDP: 1) output measure 2) input measure 3) uses of income measure 4) expenditure measure. II) A) explain the two types of price

### What is the value (present) of the this future cash flow to you today? What must be their total liabilities? Ignoring the price of purchasing the option and any transaction costs, what will your dollar gain from the exercising your call option?

1) If you will receive \$1,200,000 at the end of two years from today and your required return is 11% what is the value (present) of the this future cash flow to you today? 2) Acme Fish Company, a subsidiary of BGS Co. Inc., recently published their year end balance sheet. The balance sheet showed: Total Assets = \$12,500,00

### Multipliers, Yield Curve, Exchange Rate, Fiscal Policy

1. Discuss the conceptual similarities between the government expenditures multiplier and the money multiplier. 2. The yield curve reflects interest rates over different maturities for a given debt instrument, like 10-year treasury bonds, or 3-month treasury bills, as well as private debt. What can you conclude about an upwar

### Financial intermediation - holding on to currency

Financial intermediation is the process by which financial institutions transfer funds from ultimate lenders, i.e. savers, to ultimate borrowers, i.e. investors. It is a process that makes the economy operate more efficiently and enhances the ability of the economy to grow. Financial intermediation significantly reduces transa

### Present Value

Present Value, Future Value and Annuity Due. 1. You will receive \$5,000 three years from now. The discount rate is 8 percent. a. What is the value of your investment two years from now? Multiply \$5,000 x .926 (one year's discount rate at 8 percent). b. What is the value of your investment one year from now? Multiply y

### Allocating Your Waking Hours to Work or Leisure Appropriately

There are 168 hours in a week. Of these, about 60 hours will go to sleeping (more or less). That leaves 108 hours for which we have a choice in terms of how we will spend that time. Let's assume that we will spend the 108 hours in either work or leisure, or some kind of combination of the two. A. What factors would you consid

### Market forces: Demand in Economics

Explain the five demand shifters in managerial econimics-consumer income, prices of related goods, advertising and consumer taste, population, and consumer expectations and how they effect market forces.

### Forecasting stock prices

1. Explain how puts and calls can be used to reduce reisk, speculate, and increase portfolio returns. 3. List a minimum of four fundamental factors to be considered when trying to forecast stock prices. 4. List two advantages of buying a put on a stock instead of selling it (the stock) short. 5. If you expect int

### CORPORATE FINANCE

Helpful Tips: Text book: Corporate Finance, 8th edition, Ross. Westerfield. Jaffe Unit 2 Homework Submit answers, as an attachment, to the following questions to Unit 2 Dropbox. All calculations must be shown. For problems that have an Excel template, be sure to download the template from the publisher's web site, and s

### M1, M2 money growth Rates

Why might M1 and M2 grow at very different rates during a given year?

### Elasticity concept

Use an elasticity concept to explain each of the following observations. a. During economic boom times, the number of new personal care businesses, such as gyms and tanning salons, is proportionately greater than the number of other new business such as grocery stores. b.Cement is the primary building material in Mexico. A

### Annuities Time Value of Money

You deposit \$4,500 per year at the end of each of the next 25 years into an account that pays 10% compounded annually. How much could you withdraw at the end of each of the 20 years following your last deposit if all withdrawals are the same dollar amount? (The twenty-fifth and last deposit is made at the beginning of the 20-y

### Calculating initial amount deposited by grandparents

You are 21 years old today. Your grandparents set up a trust fund that will pay you \$25,000 per year for 20 years, starting on your 65th birthday to supplement your retirement. If the trust can earn 7.5% per year, how much will your grandparents need to put it the trust fund today?

### Calculating annual withdrawal amount

You inherit \$500,000 from your parents and want to use the money to supplement your retirement.You receive the money on your 65th birthday, the day you retire. You want to withdraw equal amounts at the end of each of the next 25 years. What constant amount can you withdraw each year and have nothing remaining at the end of 25

### Micro & Macro Economics Questions

1. What are the two types of fiscal policy and how are aggregate expenditures affected by each policy? 2. Briefly explain how each of the Federal Reserve's Monetary Polciy tools affects teh LM curve. 3. In the short-run what is the policy dilemma when the economy is experiencing stagflation> 4. If a government is co

### Money Supply Multipliers

The money supply is broadly defined to include all the deposits held with the chartered banks and near banks. The deposits with near banks, on average, are equal to 80% of those held with the chartered banks. Currency held by the public to satisfy their day-to-day needs is equal to 10% of total deposits held by the depository

### I have research questions

A. From time to time, the city of Chicago provides free concerts. Can this program be rationalized on the basis of welfare economics? Relate the program to the concept of merit goods. b. Some say, "Small corporations should face lower tax rates than large businesses, just as individuals with low incomes should face lower inco