For credit, you must show your work in 1. 2, and 4 below. Round your final result to the nearest dollar. Warning: rounding intermediate steps may introduce errors in final result and if so, you will not get full credit.
1. Using an interest rate of 3 percent, compute the present value in total of a flow received: of $5800 one year from now, $7500 two years from now and $8300 three years from now.
2. Using the same interest rate as in #1 above, compute the present value of the receipt of $6400 at the end of each year in perpetuity.
3. _________ maximization is achieved when a company manages its business in such a way that its profits period by period over time, discounted at the appropriate interest rate, will cause the present value of the company to be its largest A) asset B) market position C) revenue D) Wealth or stockholder wealth
4. Suppose market demand and supply are given by: Qd = 140 - 2P and QS = 20 + 3P. P is in dollars. The equilibrium price in this market is _______ A) $20 B) $24 C) $25 D) $32 E) $120