(a) Jim has $10,000 to deposit. Bank Altos offers 1.5 per cent interest compounded annually, while Bank Santos offer 1.25 per cent interest compounded monthly. (i) Determine the future value of investing $10,000 in Bank Altos after 4 years. [2 marks] (ii) Determine the present value of investing $10,000 in Bank Santos over 4 years. [1 mark] (iii) Which bank should Jim choose if Jim wants the highest return after 4 years? [2 marks] (b) Consider the demand function where Q is quantity demanded, P is price, and I is income. (i) Compute partial income elasticity of demand. [2 marks] (ii) Interpret partial income elasticity of demand obtained in part (i). [1 mark][Fill in the blank]

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We start by identifying all parts of the question and the data given across the blanks. (a) (i) Future value of $10,000 at Bank Altos with 1.5% annual compounding for 4 years. - The formula is FV = PV × (1 + r)^t. Here PV = 10,000, r = 0.015, t = 4. - Compute: (1 + 0.015)^4 ≈ 1.0610, so FV ≈ 10,000 × 1.0610 = 10,610.00 (rounded to the nearest cent as $10,609.10 in the given answer). - Therefore theFuture Value should reflect the annual compounding effect over 4 years. The reasoning shows why the final figure is just over $10,600. (......Login to view full explanation

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