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Suppose the interest rate is 4.4 %. a. Having $ 650 today is equivalent to having what amount in one year? b. Having $ 650

Suppose the interest rate is 4.4 %.

a. Having $ 650 today is equivalent to having what amount in one year?

b. Having $ 650 in one year is equivalent to having what amount today?

c. Which would you prefer, $ 650 today or $ 650 in one year? Does your answer depend on when you need the money? Why or why not?

a. Having $ 650 today is equivalent to having what amount in one year?

It is equivalent to $

nothing. (Round to the nearest cent.)

b. Having $ 650 in one year is equivalent to having what amount today?

It is equivalent to $

nothing. (Round to the nearest cent.)

c. Which would you prefer, $ 650 today or $ 650 in one year? Does your answer depend on when you need the money? Why or why not?

"Because money today is worth more than money in the future, $ 650 today is preferred to $ 650 in one year. This answer is correct even if you don't need the money today, because by investing the $ 650 you receive today at the current interest rate, you will have more than $ 650 in one year."

Is the above statement true or false?

True

False

What is the present value of $ 1,000 paid at the end of each of the next 69 years if the interest rate is 7 % per year?

The present value is $ (Round to the nearest cent.)

You want to endow a scholarship that will pay $ 6,000 per year forever, starting one year from now. If the school's endowment discount rate is 6 %, what amount must you donate to endow the scholarship?

The amount you must donate is $ . (Round to the nearest cent.)

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