Answer Happy

The market interest rate is 3 percent and is expected to stay at that level. Consumers can borrow and lend all they want at this rate. Consider each of the following situations. Would you prefer a $500 gift today or a $540 gift next year? You would prefer Would you prefer a $100 gift now or a $500 loan without interest for four years? You would prefer Would you prefer a $350 rebate on an $8,000 car or one year of financing for the full price of the car at O percent interest? You would prefer You have just won a million-dollar lottery and will receive $50,000 a year for the next 20 years. How much is this worth to you today? (Suppose you receive the first of 20 payments today.) The lottery is worth $1. (Enter a numeric response rounded to two decimal places.) You win the "honest million" jackpot. You can have $1 million today or $60,000 per year for eternity (a right that can be passed on to your heirs). (Assume you care about your heirs.) Which do you prefer? You would prefer