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A house, which you could rent for $10,000 a year and sell for $220,000 a year from now, can be purchased for $200,000. What is

  1. A house, which you could rent for $10,000 a year and sell for $220,000 a year from now, can be purchased for $200,000. What is the rate of return on this house?

2. Suppose that a scarce resource, facing a constant demand, will be exhausted in 5 years. If an alternative resource will be available at a price of $80 and if the interest rate is 7%, what must the price of the scarce resource be today?

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