I do not know how to solve these in order to get the correct answer. I would lov

Question

I do not know how to solve these in order to get the correct answer. I would love to know the steps and process to follow

22. Suppose that a bond pays you $1100 one year from now. It is selling for $1,025. What interest rate would make a person indifferent between the selling price of $1,025 and the bond payment? A) 9.8% B) 7.3% C) 11.1% D) 10.2% 25. The demand and supply curves for a product are Q 50 0.5P and Q 2.5P 5, where P is the price per unit and Q measures millions of units. If the government levies a S1.20 per unit tax on buyers, what is the size of the deadweight loss? A) S300,000 B) S500,000 C) S800,000 D) S1.2 million 26. Conrad has $10,000; he is considering using the entire amount whether to (1) invest in a mutual fund with an 8% annual interest rate or (2) remodel his kitchen. If he remodels the kitchen, he will be able to sell his home for an additional $13,000 when he moves at the end of two years. Which of the following statements is (are) TRUE? I. The net present value of remodeling the kitchen is $1,145.4 II. Conrad is better off remodeling the kitchen. III. If Conrad invests in the mutual fund, his money will grow to $10,800 at the end of two years C) I and II D) I and III

Explanation / Answer

22. Ans: 7.3%

Explanation:

F = P(1 + i)n

1100 = 1025(1 + i)1

(1 + i)1 = 1100 / 1025

1 + i = 1.073

i = 0.073 or 7.3%

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