imagine that upon purchasing a helmet an economist pays a deposit of $700. Calculate the present value of the $700 if it will be returned at the end of 15 years if the future is discounted using a rate of 5%. Please show your calculations

imagine that upon purchasing a helmet an economist pays a deposit of $700. Calculate the present value of the $700 if it will be returned at the end of 15 years if the future is discounted using a rate of 5%. Please show your calculations

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 21.2IP

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Question

Making a new protective helmet costs $200. Proper disposal, where all the toxic stuff is correctly handled and processed, costs $800. However, there is an underground trade in improper disposal of helmets, and the going price for this is $500.

Question: Truth be told, most economists don’t wear the helmets for most of their careers. Their ideas are usually only good at the start of their careers. After 15 years or so, most of their ideas get stale and nobody is interested in reading or publishing their research, even when they work really, really hard on it. Anyway, imagine that upon purchasing a helmet an economist pays a deposit of $700. Calculate the present value of the $700 if it will be returned at the end of 15 years if the future is discounted using a rate of 5%. Please show your calculations.

Definition Definition Operation costing method employed to determine the value of a product at each process or stage of the production process, applicable where goods produced from a series of continuous operations or procedure. Process costing is employed by businesses that manufacture goods and where production is in repetitive inflow.

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