What would the annual interest rate be if an investor paid a $50 perpetuity?.
The table below gives an individuals marginal utility schedule for good X and good Y. Suppose that Show more The table below gives an individuals marginal utility schedule for good X and good Y. Suppose that X and Y are the only goods available the price of X and the price of Y are $1 and the individuals income is $8 per time period and is all spent. Q MUx MUy 1 11 19 2 10 17 3 9 15 4 8 13 5 7 12 6 6 10 7 5 8 8 4 6 Totals 60 100 Indicate how this individual should spend his/her income in order to maximize total utility. Justify your answer. What is the total amount of utility received by the individual when in equilibrium? Justify your answer. State mathematically the equilibrium condition for this individual. A perpetuity is a bond that pays an amount per year forever. If a perpetuity pays $5 per year: (a) What would the annual interest rate be if an investor paid a $50 perpetuity? (b) what would be the annual interest rate if an investor paid $200? $600? Bonds are known as fixed income securities because the future payments that they will make to investors are fixed by the bond agreement in advance. Show less
What would the annual interest rate be if an investor paid a $50 perpetuity?
