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# The Time Value of Money

### Research on GM Automotive Industry

I would like to learn something about GM automotive industry. Could you provide some examples? 1. A brief history of the industry. An industry overview.

### Differentiate between demand and supply side theories

Explain the effects of monetary and fiscal policy on economic activity using both IS/LM and AS/AD models. Also explain the difference between the supply side and demand theories.

During the audit of a closely held corporation the junior member of the audit team discovers an anomaly in the books which suggests that certain corporate officials may be laundering overseas money in the company's international sales operation. The junior auditor suspects that the senior member of the team is aware of the issu

### Interest Rate and Velocity

1) Your college has agreed to give you a \$10,000 tuition loan. As part of the agreement, you must repay \$12,600 at the end of the 3-year period. What interest rate is the college charging? 2) A country's gross domestic product (GDP) is \$20 billion and its money supply (MS) is \$5 billion. a) What is the country's velocity

### A Company produced and sold 8,000 units of product and is operating at 80% of plant capacity.

See attached file for full problem description. A Company produced and sold 8,000 units of product and is operating at 80% of plant capacity. Unit information about its product is as follows: Sales Price \$35 Variable manufacturing cost \$16 Fixed manufacturing cost (48,000 / 8,000) 6

### Years for an Amount Invested to Grow a Particular Value

How many years will the following take? a. \$500 to grow to \$1,039.50 if invested at 5 percent compounded annually. b. \$35 to grow to \$53.87 if invested at 9 percent compounded annually. c. \$100 to grow to \$298.60 if invested at 20 percent compounded annually d. \$53 to grow to \$78.76 if invested at 2 percent compounde

### Predict the effects on the equilibrium levels of aggregate output

1. For each of the following, predict the effects on the equilibrium levels of aggregate output (Y) and the interest rate ( r ): A) During 2005, the Federal Reserve was tightening monetary policy in an attempt to slow the economy. The Congress passed a substantial cut in the individual income tax at the same time. B) D

### Finance - The present value of a single sum of \$100 to be received in 10 years and discounted at a annual 12% rate on a semi-annual basis. The best way to compare two sums to be received at different times in the future. Factor to use when computing the present value of a series of rent payments.

2. The present value of a single sum of \$100 to be received in 10 years and discounted at a annual 12% rate on a semi-annual basis is: a. \$32.19 b. \$31.18 c. \$100 d. \$310.58 3. The best way to compare two sums to be received at different times in the future is to compute: a. The present value of each sum. b. The futur

### 10-Year return for the S&P/5-Year S&P small cap 600 return

As of July 16, 2007 the 10-year return for the S&P was 9.28% (Accessed from http://www.barra.com/Research/SummaryReturns.aspx) Question #1. How much will you have if you put \$100 into an account each month for 10 years starting today if you earn the 10-Year S&P 500 return? (show your work. If you use Excel or a financial c

### Money and banking

Figure 1 in the chapter shows the estimated real and nominal rates for three-month Treasury bills. Go to http://www.martincapital.com/charts.htm Click on "interest rates and yields" then on "Nominal versus Real Market Rates." a. Compare the three-month real rate to the long-term real rate. Which is greater? b. Compare the sh

### Economics for Managers

1. If a firm used a combination of inputs that was to the left of the isocost line, it would indicate that A. It is exceeding its budget. B. It is not spending all of its budget. C. It is operating at its optimal point because it is saving money. D. None of the above. 2. The Learning Curve A. Is really no different

### IS/LM Rule Output

1. Assume that in a certain economy the LM curve is given by Y=2000r-2000+2(M/P), and the IS curve is given by Y=8000-2000r+, where  is a shock that is equal to 200 half of the time and -200 half of the time. The price level is fixed at P=1 for simplicity. The natural output level is 4000. The government wants to keep outp

### INVESTMENT OF \$50,000

Suppose you have invested \$50,000 in the following four stocks: Security Amount Invested Beta Stock A \$10,000 0.7 Stock B \$15,000 1.2 Stock C \$12,

### Return on investment and savings

1) A building is purchased with a principal amount to pay down of \$108000. The payments will be made in 20 EQUAL, end of year (not monthly!) installments. What are the equal installments if the annual interest rate is 10%? 2) Your job pays only once per year on December 31 - you just received your salary of \$50,000 and will

### Engineering Economics

1) The time it would take for money to double at a simple interest rate of 10% per year is closest to: A) 5 Years B) 7 Years C) 10 Years D) 12 Years 2) At a compound interest rate of 10% per year, \$10,000 one year ago is equivalent to how much 1 year from now? A) \$8264 B) \$9091 C) \$11,000 D) \$12,000 3) In most engine

### Time Value of Money: Present Value of Annuity, Future Value of Annuity, EAR versus APR, monthly payment for a loan

1) Calculating Annuity Present Value. An investment offers \$6,000 per year for 15 years, with the first payment occurring 1 year from now. If the required return is 8 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? 2) Calculating Annuity Futur

### The Keynesian Cross Model

This is a power-point presentation that demonstrates the IS/LM MODEL as outlined in Mankiw's intermediate macroeconomics text. The slides build the model up one step at a time and explain how the relationship between the Keynesian cross, the money market and the IS/LM model.

### Graphing a production possibilities frontier

I need a graph of the production possibilities frontier for the following question: American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, while a Japanese worker can produce 5 tons of grain a year. Assume that each country has 100 million workers.

### total growth in the investment account increases over time

Two plans have been proposed for accumulating money for capital projects at Thunder Bay Lighting. One idea is to put aside \$10000 per year, independent of growth. The second is to start with a smaller amount, \$8000 per year, but to increase this in proportion to the expected company growth. The money will accumulate interest at

### Economics of internet

A Congressional staffer calls you on the phone for advice. Her boss may propose a law where sending an email costs 5 cents for every email address included in the message. The government does not get the money; it goes to the recipient(s) of the email. That is, each person has an email credit account. For every email sent, 5

### Basic economic questions

1. Explain why time lags are a problem for the effective implementation of fiscal policy. 2. Explain what is meant by a structural deficit and how it would differ from a cyclical deficit. 3. List and discuss the functions of money. 4. Explain what is meant by a "fractional" reserve banking system. How d

### The Concept of Velocity of Money

An increase in the velocity of money appears inflationary, as it can make prices rise. Even though we may be experiencing deflation, it could be masked by an increase in the velocity of money.

### Velocity of Money

What factors beside transaction processing speed affect the velocity of money? Is there a practical limit on the velocity of money? what economic impact will result from nearing or reaching this limit? Are there economic benefits to retarding the velocity of money under certain circumstances? How should busines

### Microeconomics problem

Accounting Versus Economic Profit (Explicit and Implicit Costs) Exhibit 1 represents the annual income statement of Joe's Clothing Store. Joe worked full time in the store and invested \$30,000 to buy the store and stock it with merchandise. He recently turned down an offer of a salaried position paying \$10,000 per y

### Becker Theorem Activity Perspective

Using a "time + money" activity perspective, what are some of the changes you might anticipate from each of the following trends: a. The impact on Internet usage patterns as more of the world's Internet users coming from lower-income developing countries such as India, China, and Brazil? b.The impact of rising broadband ad

### Internet economics

Using a "time + money" activity perspective, what are some of the changes you might anticipate from each of the following trends: a.The impact on Internet usage patterns as more of the world's Internet users coming from lower-income developing countries such as India, China, and Brazil? b.The impact of rising broadband ado

### Time Value of Money : Interest Rate, Amount paid to retire debt, monthly interest rate

1. What interest rate would allow you to accumulate \$10,000 in 8 years if you saved \$60 per month and earned compounded interest monthly? 2. What amount of money should you pay each month to retire a \$12,000 debt in five years if the interest rate on money owed is 10%? 3. If the equivalent annual interest rate is 15% what

### Macroeconomic study of Monetary Policy

In reference to "monetary policy," 1. Please describe the monetary system of the United States including how it is flexible in relation to economic conditions, and how the US Federal Reserve System changes the supply of money. 2. How does the supply of money impact the economy? These are topics that are touched on

### (Policy Lags)

What lag in discretionary policy is described in each of the following statements? Why do long lags make discretionary policy less effective? a. The time from when the government determines that the economy is in recession until a tax cut is approved to reduce unemployment. b. The time from when the money supply is increa

### Theory of Money and Deflation

Three questions: Outline the Quantity theory of money and it's theory of inflation. What effect will deflation have on the economy? If the deflation is acute and lasts only a short time, how will the effect differ from deflation that lasts a long time and is gradual?