Can anyone help me with this economics/finance question?
Can anyone help me with this economics/finance question?
Suppose that you are a participant in the single period financial market. Your certain expectation is to receive £3,000 immediately, and an additional £5,328 at the end of the period. The market rate of interest for riskless borrowing and lendingis 11 per cent.
1- What is the maximum amount you can consume immediately?
A- £8,328.00
B- £7,800.00
C- £51,436.36
D- £7,843.64
2-What is the maximum that you can consume at the end of the period?
A- £8,328.00
B-£7,800.00
C-£5,658.00
D-£8,658.00
3- Suppose you wished to consume £5000 immediately, how much can you consume at the end of the period?
A-£3,108.00
B-£1,000.00
C-£8,656.00
D-£7,548.00
4- If you wished to consume £7548 at the end of the period, how much can you consume now?
A-£3,000.00
B-£1,000.00
C-£981.82
D-£7,800.00
How do you work these answers out? Any help would be greatly appreciated.
Can anyone help me with this economics/finance question?
Suppose that you are a participant in the single period financial market. Your certain expectation is to receive £3,000 immediately, and an additional £5,328 at the end of the period. The market rate of interest for riskless borrowing and lendingis 11 per cent.
1- What is the maximum amount you can consume immediately?
A- £8,328.00
B- £7,800.00
C- £51,436.36
D- £7,843.64
2-What is the maximum that you can consume at the end of the period?
A- £8,328.00
B-£7,800.00
C-£5,658.00
D-£8,658.00
3- Suppose you wished to consume £5000 immediately, how much can you consume at the end of the period?
A-£3,108.00
B-£1,000.00
C-£8,656.00
D-£7,548.00
4- If you wished to consume £7548 at the end of the period, how much can you consume now?
A-£3,000.00
B-£1,000.00
C-£981.82
D-£7,800.00
How do you work these answers out? Any help would be greatly appreciated.