61 Views

Download Presentation
##### Chapter 16

**An Image/Link below is provided (as is) to download presentation**
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -

**Chapter 16**Interest Rates, Investments, and Capital Markets**Table 16.02 Future Value, FV, to which $1 Grows by the End**of Year t at Various Interest Rates, i, Compounded Annually,$**Table 16.03 Present Value, PV, of a Payment $1 at the End**of Year t at Various Interest Rates, i, Compounded Annually,$**Figure 16.01 Present Value of a Dollar in the Future**Present value, PV , of $1 $1 i = 0% 90 80 70 60 50 40 30 20 10 i = 10% i = 5% = 20% i 0 10 20 30 40 50 60 70 80 90 100 t , Years**Table 16.04 Present value, PV of a Flow of $10 a Year for t**Years at Various Interest Rates, i, Compounded Annually,$**Figure 16.02 Annual Earnings of High School and College**Graduates Annual earnings, Thousands of 1995 dollars 40 Benefit College graduate 30 20 High school graduate 10 Cost 0 – 10 18 22 30 40 50 60 70 Age, Years**Figure 16.03 Price of an Exhaustible Resource**p , $ per unit _ p Price p 1 m 1 T Time, Years**Table 16.06 Price and Quantity of Coal Reflecting the**Amount of Coal and the Interest Rate**Figure 16.04 First-Year Price in a Two-Period Model**First-year price of coal, p , $ per pound 1 190.48 150 100 50 0 100 200 300 400 Q , Amount of coal in the ground**Figure p16.01 Redwood Trees**Real price of old-growth redwoods 300 250 200 150 100 50 0 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983**Figure 16.05 Price of Oil over Time**Real price of crude oil 10 8 6 4 2 0 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990**Figure 16.06 Capital Market Equilibrium**Interest rate, 1 S i , % per year 2 S e 1 i 1 e 2 i 2 D Q Quantity of funds per year Q 1 2**Figure 16.07 How Government Borrowing Squeezes Out Private**Investment (a) Private Sector (b) Government (c) Market i , % per year i , % per year i , % per year S D p 2 D g 1 D g e i i i 2 2 2 2 i i i e 1 1 1 1 2 D 1 D 1 2 2 1 1 2 Q Q Q Q Q Q p p g g Quantity of funds per year Quantity of funds per year Quantity of funds per year