--%>

Calculating Present Value by Interest Rate

When all bonds are perpetuities which annually pay $1000 (the sum of one thousand and 00/100 dollars) per annum, at an interest rate of 10 percent, the price of these bonds is: (1) $4000. (2) $5000. (3) $6250. (4) $8000. (5) $10,000.

Can anybody suggest me the proper explanation for given problem regarding Economics generally?

   Related Questions in Microeconomics

  • Q : Advantage of a partnership over

    Can someone help me in finding out the right answer from the given options. One of the advantages of a partnership over proprietorship is: (i) In a partnership just one partner is liable for the debt. (ii) Partnerships permit for more specialization in the management.

  • Q : Determine price elasticity of demand An

    An approximate estimate of the price elasticity of demand is best computed by the absolute value of the formula: (1) change in P / change within Q. (2) % change in Q / % change in P. (3) % change in Q / % change in income. (4) % chang

  • Q : Illustrates the Loren curve by total

    When 40 percent of total personal income was received by 20 % of the highest income families, in that case the: (w) income distribution would be perfectly equal. (x) income pattern would be foreign to the U.S. (y) Lorenz curve would be the 45 degree r

  • Q : Minimum Wage Laws I have a problem in

    I have a problem in economics on Minimum Wage Laws. Please help me in the following question. Minimum wage legislation has been promotes as a technique to: (i) Make sure that workers are paid beneath the subsistence salaries. (ii)  Perpetuate poverty. (iii) Maxim

  • Q : Dilemma on labor monopsonist The labor

    The labor monopsonist will hire labor up to the point where the marginal: (i) Revenue product of the labor equivalents the wage. (ii) Resource cost of labor equivalents the salary. (iii) Revenue product of labor equivalents its marginal resource cost. (iv) Resource co

  • Q : Value of multiplier When MPC and MPS

    When MPC and MPS are equivalent then what is the value of multiplier? Answer: MPC = MPS = 1/2 Thus K = 1/MPS = 1/1/2 = 2/1 = 2 [that is, Multiplier K = 2].

  • Q : Analytic Time-The Short Run I have a

    I have a problem in economics on Analytic Time-The Short Run. Please help me in the following question. Economists classify a time-period in which at least one resource is fixed as: (i) Short run. (ii) Long run. (iii) Production period. (iv) Profit period.

  • Q : Present Value and Rates of Return When

    When the annual interest rate is 12 percent and a rental house can be expected to rent perpetually for $1,000 monthly, rough computation suggests the house contain a present value of: (1) $240,000. (2) $144,000. (3) $100,000. (4) $72,000. (5) $12,000.

  • Q : Competition and Social Welfare The

    The purely competitive firm in an output market which hires from a purely competitive labor market will use labor at the point where VMP = W as the firm: (i) Operates in the society's best interest. (ii) Wants to be pretty fair to workers. (iii) Is eg

  • Q : Problem regarding Bilateral Monopoly

    The bilateral monopoly model is most likely most applicable in analyzing a case where a: (1) Major employer collectively bargains with the influential union. (2) Firm consists of monopoly power in output market and monopsony power in the labor market. (3) Labor market