Question : 141.AllenSteelCompanyisconsideringwhethertobuildanewmill.Iftheinterestraterises, a.thepresentvalueofthereturnsfromthemillwillfall,soAllenwillbelesslikelytobuildthemill. b.thepresent value : 1261850

141.AllenSteelCompanyisconsideringwhethertobuildanewmill.Iftheinterestraterises,

a.thepresentvalueofthereturnsfromthemillwillfall,soAllenwillbelesslikelytobuildthemill.

b.thepresent value ofthe returns fromthe mill willfall, so Allenwill be morelikely to buildthe mill.

c.the presentvalue ofthe returnsfromthe millwill rise,so Allenwillbe lesslikely tobuild themill.

d.thepresent value ofthe returns fromthe mill will rise,so Allen willbe more likelyto build the mill.

142.AUniversityofIowabasketballstandoutisofferedachoiceofcontractsbytheNewYorkLiberty.Thefirstonegivesher$100,000oneyearfromtodayand$100,000twoyearsfromtoday.Thesecondonegivesher$132,000oneyearfromtodayand$66,000twoyearsfromtoday.Asheragent,youmustcomputethepresentvalueofeachcontract.Whichofthefollowinginterestratesisthelowestoneatwhichthepresentvalueofthesecondcontractexceedsthatofthefirst?

a.7percent

b.8percent

c.9percent

d.10percent

143.Acarsalespersongivesyoufouralternativewaystopayforyourcar.Thefirstistopay$18,000today.Thesecondistopay$19,000oneyearfromtoday.Thethirdistopay$20,300twoyearsfromtoday.Thefourthistopay$21,500threeyearsfromtoday.Iftheinterestrateis6percent,whichpaymentoptionhasthelowestpresentvalueandwhichhasthehighest?

a.Thefirstislowest;thesecondishighest.

b.Thesecondislowest;thethirdishighest.

c.Thethirdislowest;thefourthishighest.

d.Thefourthislowest;thefirstishighest.

144.TheYouLookMarvelous!cosmeticcompanyisconsideringbuildinganewshampoofactory.Itsaccountantsandboardofdirectorsmeetanddecidethatitisnotagoodideatobuildthefactory.Ifinterestratesfallafterthemeeting

a.thepresentvalueofthefactoryrises.It’smorelikelythecompanywillbuildthefactory.

b.thepresentvalueofthefactoryrises.It’slesslikelythecompanywillbuildthefactory.

c.thepresentvalueofthefactoryfalls.It’smorelikelythecompanywillbuildthefactory.

d.thepresentvalueofthefactoryfalls.It’slesslikelythecompanywillbuildthefactory.

145.Markovich Corporationisconsideringbuildinga newplant.Itwillcost$1 milliontodaytobuilditand itwillgeneraterevenuesof$1.121millionthreeyearsfromtoday.Oftheinterestratesbelow,whichisthehighestinterestrateatwhich Markovich still wouldbe willing tobuild the plant?

a.3percent

b.3.5percent

c.4percent

d.4.5percent

146.Yoyo’sFrozenYogurt,Inc.isthinkingofbuildinganewwarehouse.Theybelievethatthiswillgivethem$50,000ofadditionalrevenueattheendofoneyear,$60,000additionalrevenueattheendoftwoyears,and$70,000inadditionalrevenueattheendofthreeyears.Iftheinterestrateis5percent,Yoyowouldbewillingtopay

a.$140,000,butnot$150,000.

b.$150,000,butnot$160,000.

c.$160,000,butnot$170,000.

d.$170,000,butnot $180,000.

147.Theconceptofpresentvaluehelpsexplainwhy

a.investmentdecreaseswhentheinterestrateincreases,anditalsohelpsexplainwhythequantityofloanablefundsdemandeddecreaseswhentheinterestrateincreases.

b.investmentdecreaseswhentheinterestrateincreases,butitisofnohelpinexplainingwhythequantityofloanablefundsdemandeddecreaseswhentheinterestrateincreases.

c.thequantityofloanablefundsdemandeddecreaseswhentheinterestrateincreases,butitisofnohelpinexplainingwhyinvestmentdecreaseswhentheinterestrateincreases.

d.Noneoftheabovearecorrect;theconceptofpresentvalueisofnohelpinexplainingwhyeitherinvestmentorthequantityofloanablefundsdemandeddecreaseswhentheinterestrateincreases.

148.Whichofthefollowingconceptsismosthelpfulinexplainingwhyinvestmentincreaseswhentheinterestratefalls?

a.deadweightloss

b.presentvalue

c.economicgrowth

d.financialintermediation

149.Otherthingsthesame,anincreaseintheinterestratemakesthequantityofloanablefundsdemanded

a.rise,andinvestmentspendingrise.

b.rise,andinvestmentspendingfall.

c.fall,andinvestmentspendingrise.

d.fall,andinvestmentspendingfall.

150.Otherthingsthesame,anincreaseintheinterestratemakesthequantityofloanablefundssupplied

a.rise,andinvestmentspendingrise.

b.rise,andinvestmentspendingfall.

c.fall,andinvestmentspendingrise.

d.fall,andinvestmentspendingfall.