(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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To approach this question, I will tackle each blank in turn and explain the reasoning behind the calculated values and interpretations. (i) Future value of $10,000 in Bank Altos after 4 years at 1.5% annually - The problem states annual compounding, so we use the formula FV = P(1 + r)^t with P = 10000, r = 0.015, t = 4. - Compute: (1 + 0.015)^4 ≈ 1.061364; multiply by 10000 to get approximately 10613.64. - Therefore, the future value is about 10613.64. (ii) Present value of $10,000 in Bank Sant......Login to view full explanation

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