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I need help understanding this question 2 Present discounted value Consider a worker who works for 5 years and each year she earns $200. She
I need help understanding this question
2 Present discounted value Consider a worker who works for 5 years and each year she earns $200. She receives her first income today. Question 2.1 Suppose r = 0.03. What is the present discounted value of worker's income? Question 2.2 Assume r = 0.05. What is the present discounted value of worker's income? Is it higher or lower than in Question 2.1? Explain why. Question 2.3 Assume r = 0.03. The worker gets an offer from a competing firm which offers her the following incomes for the next five years: $160, $180, $200, $220, $240. Should she take this offer or should she rather keep the job which pays $200 each year? Question 2.4 Assume r = 0.03 and suppose the worker gets an offer from yet another firm which offers her the following incomes for the next five years: $240, $220, $200, $180, $160. Should she take this offer or should she rather keep the job which pays $200 each year? Did you get the same answer as in Question 2.3? Explain whyStep by Step Solution
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