Question 17(1 point)

Suppose instead of r=3% for a government, they face an r = 12% because of past high inflation episodes and other risks associated with governmental mismanagement. For this government, what is the maximum amount it makes sense to spend today in order to generate $1,000,000 in benefits 30 years from today? (answer is the NPV of $1,000,000 at t=30 years and r=.12). Yep, it's hard to be future oriented in a high interest rate environment.

Question 17 options:

a)

$136,000

b)

$33,000

c)

$412,000

d)

$516,000