Question

2 points QUESTION 25 Which would you prefer? Option X: $200 in five years time if the discount rate is 2%; or Option Y: $100 in five years time if the discount rate is 2%. They are both worth $100 in five years time Option X Option Y It depends on the market interest rate 2 points s QUESTION 26 What is a generally accepted value for the social discount rate? 3% 20% 2.00% 0.20% 0% 2 points sa QUESTION 27 If the pure rate of time preference is 1%, the elasticity of the marginal utility of consumption is 2, and economic growth 4%, what is the social discount rate? 1% 2% 7% 9% Click Save and Submit to save and submit. Click Save All Answers to save all answers Save All Answers Save an MacBook Air

Answer 1

As per HOMEWORKLIB RULES in case of multiple questions only the first question is to be attempted

Kindly ask rest of the questions in a separate post

25.

OPTION X

Reason: Since the discount rate is the same, higher value of money would be preferred by an individual, as it would yield a higher present value . Here, Option X has higher deposit value and thus would have a higher present value as compared to Y

Present value of Option X: