Question 13 2 pts Explain in terms of current investment why

Question 13 2 pts Explain in terms of current investment why the present discounted value of $1.5 million received 40 years from now could be only $459,000. What discount rate produces this value?

Solution

Answer to question 13:

given: Present Value(PV)= $459,000

Future discounted value(FV)=$1500,000

number of years(n)=40

substituting in the formula to get,

FV=PV*(1+i)^n, where i=discount rate

therefore,1500,000=459,000*(1+i)^40

3.27^(1/40)=(1+i)

1.03=(1+i)

(1+0.3)=(1+i)

i=0.3 or 3%

Answer to question 15:

Wage inflation- Rising wages prompt higher expenses for firms and higher spending. This is a vital factor as it can act naturally fortifying prompting a wage value winding.

Economic growth rate versus hidden pattern rate-On the off chance that the hidden pattern rate is 2.5%, economic growth rate over this objective is probably going to cause inflationary weight.

Answer to question 22:

Dead zones are hypoxic zones or territories in the sea of such low oxygen focus that creature life suffocates. Gulf of Mexico is the largest dead zone in the world covering approximately 8,776 square miles. The primary cause of this is the run-off from agricultural fields of Iowa.Half of the nitrogen and a fourth of the phosphorous that keeps running into the inlet originates from corn and soybean fields in the Midwest. In Iowa alone, those yields cover 65 percent of the state.Once the nutrient rich run offs from the filds enter the water body it gives rise to the growth of an algae called photoplankton. This algae has a short life span and once it dies it sinks to the ocean bed, where bacteria decompose it. These bacteria also uses up the oxygen necessary for the survival of aquatic animals. Scientists have suggested lesser dependence on fertilizers by farmers in Iowa and the practice od crop rotation can help control the problem.