1 what is the PV of $8000 due after 2 years and $10000 in 5 years? The interest rate is J1=6%for 3 years and J1=8% after that

Finance Aug 28, 2020

1 what is the PV of $8000 due after 2 years and $10000 in 5 years? The interest rate is J1=6%for 3 years and J1=8% after that. a. 13923.79 b. 14057.09 c. 14331.29 d. 14489

2 The price of a Big Mac in the U.S. is $5.99 and the price in Turkey is 27. Turkish Lira (TRY). What is the implied PPP of the TRY per dollar? Lotfen birini seçin: a. 4.51 TRY/$ b.4.17 TRY/$ C. 4.84 TRY/S d. 3.84 TRY/$

Expert Solution

1 Present Value = Amount / (1+rate)^year + Amount / (1+rate)^year +Amount / (1+rate)^year +............

Present Value = 8000/(1+0.06)^2 + 10000/(1+0.08)^5

= 13925.80 Answer

The closest option is option A.

Solution

Implied PPP = Price of Big mac in Turkey/Price in US

= 27/5.99

= 4.5075

= 4.51 TRY/$

OPTION A

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