Answer each of the following questions. a. What single investment made today, earning 12% annual interest, will

Question:

Answer each of the following questions.
a. What single investment made today, earning 12% annual interest, will be worth $6,000 at the end of 6 years?
b. What is the present value of $6,000 to be received at the end of 6 years if the is 12%?
c. What is the most you would pay today for a promise to repay you $6,000 at the end of 6 years if your is 12%?
d. Compare, contrast, and discuss your findings in parts a through c.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...