Q: Suppose your annual nominal income for the next four years is $78,500, and the annual inflation rate…
A: Nominal income: When the income of a consumer is calculated on the basis of the current year's…
Q: If an investment of P24,500 twenty-four years ago is now worth P55,000, at what rate, compounded…
A: A=P(1+i/n)^nt A-Amount=55000 P-Principle=24500 n-compounding period=2 t=time=24 yrs…
Q: 7. Interest, inflation, and purchasing power Suppose Susan is an avid reader and buys only comic…
A: The interest rate which is being adjusted for inflation is known as the real interest rate. It…
Q: The implied real interest rate of 3-month Treasury bills (U.S. government debt of 3-month maturity)…
A: We know, nominal interest rate = Real interest rate + inflation rate
Q: A friend is celebrating her birthday and wants to start saving for her anticipated retirement. She…
A: Given , Years until retirement: 30 Amount to withdraw each year: $120,000 Years…
Q: Suppose that before the end of the year a typical consumer purchased 125 apples, 60 bananas, and 85…
A: The consumer price index measures the overall cost of the goods and services bought by a typical…
Q: rate of inflation
A: The inflation calculates the increment in price level. There are different types of inflation:…
Q: Find the inflation rate in the economy if the real interest rate is 4% and Nominal Interest rate is…
A: # in an economy we can easily find the prevailing inflation rate by using the fishers equation which…
Q: Suppose the nominal interest rate is 10 percent, the tax rate on interest income is 28 percent, and…
A: Given, Nominal interest rate = 10% Tax rate = 28% Inflation rate = 6%
Q: If in the banking sector the nominal interest rate is 3% and inflation rate is 1.7% Calculate what…
A: The information being given is:- Nominal interest rate in banking rate = 3% Inflation rate = 1.7% We…
Q: What would be the inflation rate in Alaska if Nominal interest rate is 2% and real interest rate is…
A: The data presented in the question above is:- We are given with the information of the economy of…
Q: Find the real interest rate prevailing if inflation is 2% and Nominal Interest rate is 3 times the…
A: The information given to us is:- Inflation = 2% Nominal interest rate = 3* inflation rate = 3*2 = 6%…
Q: A basket of goods and services purchased by an average urban consumer had a cost of $340 in the year…
A: The cost of price index (CPI) is a measure used to estimate the price changes in a basket of goods…
Q: Suppose your annual nominal income for the next four years is $78,500, and the annual inflation rate…
A: When the income of a consumer is calculated on the basis of the current year's price, then the…
Q: If the nominal interest rate on an asset is 10% and inflation is also 8%, what is the real interest…
A: The nominal interest rate is the percentage increase in money you pay the lender for the use of the…
Q: What is the value of inflation when real interest rate is 6% and the nominal interest rate is also…
A: # The difference between Nominal interest rate and real interest rate gives us the value of…
Q: MCQS 1) The nominal interest rate is: a. not adjusted for current economic conditions b. adjusted…
A: 1) Real interest rate=Nominal interest rate-Inflation rateThus,Nominal interest rate=Real interest…
Q: Last year you bought a house for $200,.000, and you sell the house this year for $230.000,…
A: Answer; 1) inflation = (115.5/110) - 1 = 0.05 or 5% Capital gain = 230000-200000 = 30000 Tax on gain…
Q: If banks expect that the rate of inflation in the coming year will be 4.95% and they want a real…
A: The real interest rate is the adjusted interest rate that doesn’t include the effect of inflation…
Q: Calculate the annual rate of inflation between 2014 and 2015 (using 2012 as market basket and base…
A: Inflation is the rise in the aggregate rice level. The real GDP is the GDP measured at constant…
Q: If nominal interest rate is 8.5% and the inflation rate is 3.6% Calculate the real interest rate
A: The given information is as follows:- Nominal interest rate = 8.5% Inflation = 3.6%
Q: Suppose you make a loan of $100 that will be repaid to you in 1 year.if the loan is denominated in…
A: Nominal intrest is total of real intrest and rate .Increase in rate can cause increase in nominal…
Q: What is the inflation free (real interest rate) if the market rate is 12.6% and the inflation rate…
A: The interest rate which is calculated without taking in account the value of inflation is known as…
Q: The__________________ is the nominal interest rate minus the rate of inflation. a)annualized…
A: Interest rates play an important role in the economy. The nominal and real interest rates are the…
Q: The.... rate is equa to the ...... rate ...... the ....... rate a) real interest / nominal interest…
A: The question is based on the Fisher equation.
Q: the real interest rate is 2% and expected inflation is 3%, the nominal interest rate is O-1%. 1%..…
A: Given information, Real interest rate: 2% Expected inflation rate: 3% To find: Nominal interest…
Q: Refer to the table given. If 2010 is the base year, the inflation rate between 2010 and 2011 is…
A: Option (D).
Q: Suppose that a deceased relative had put $1,000 in an envelope in 1954 and you just discovered this…
A: here we can calculate the following terms as follow
Q: If the nominal interest rate is 8% and the inflation rate is 5%. Using the relevant real interest…
A: Given that, Nominal interest rate = 8% or 0.08 Inflation rate = 5% or 0.05 Present value (PV) =…
Q: If inflation rate is 1% and nominal interest rate is 2.1% What will be the real interest rate
A: The given information is as follows:- Inflation rate in the economy = 1% This shows the general rise…
Q: Real interest rate is equal to Nominal Interest rate when inflation is 2% True/False
A: # nominal interest rate doesn't take into account the effect of inflation anthers it cannot be used…
Q: Suppose you want to earn a real interest rate of 5%. For inflation rates of 0.0, 1.0, 2.0, …, 9.0,…
A: We know that the combined interest rate means that the relationship between inflation and the real…
Q: On January 1, 2012, Albert invested $8,000 at 5 percent interest per year for three years. The CPI…
A: A continuous increase in the general price level is referred to as inflation. The rate of interest…
Q: Over the past year (from 1 year ago to today), the inflation rate was 4.31%, the risk-free rate was…
A: The correct answer is given in the second step.
Q: Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.…
A: Amount in Bank = 200,000 Interest Rate = 5% Amount at end of 1 year or beginning of 1 year = 200,000…
Q: Using the table below, find the real value of a payment of $2,500 to be recelved each year given the…
A: Real value of $2,500 in year N = $2,500 x (100 / CPI in year N) Real value, 2016 ($) = 2,500 x (100…
Q: Suppose you lent money to a friend a few years ago at a nominal interest rate of 6%. At the time…
A: In any economy, the prices often fluctuate due to which there are many consequences in the economy.…
Q: Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.…
A: Now if the inflation is expected to be 4%, according to purchasing power, 200,000 × 1.04 or 208,000…
Q: 37) If the expected inflation rate was 2.5%, the expected real interest rate was 4.0%, and the real…
A: Given; Expected inflation rate= 2.5% Expected real interest rate= 4.0% Real interest rate= 5.5%
Q: Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the end of the…
A: The real interest rate is adjusted to remove the effects of inflation. A nominal interest rate…
Q: xample: Interest rate adjusted for inflation if the market interest rate is 10% and the overall…
A: Given information: The market interest rate is 10%. => Nominal interest rate = 10% -----------…
Q: A. Find the real value of your 40,000 salary for each of the next three year's. year1? year2?…
A: a. The real value can be calculated by using the following equation:
Q: If the real interest rate is 6% and the inflation rate is 12%, then the nominal interest rate equals…
A: Nominal interest rate=inflation/real interest rate =12/6=6
Q: You and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they are…
A: The value of insurance can be calculated by using the following formula.
Q: If the nominal interest rate offered by local bank is 14%, expectation inflation rate is 4%, and…
A: here we calculate the After tax Interest rate by using the nominal Interest rate so the calculation…
Q: If the rate of inflation is 5.7 %, what nominal interest rate is necessary for you to earn a 2.2 %…
A: The nominal interest rate (or money interest rate) is the percentage increase in money you pay the…
Q: Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.…
A: The money in term account = $200,000 Interest rate = 5%
Q: An investment offers a 12% total return over the coming year. Bill Morneau thinks the total real…
A: Inflation is the rate of increase in prices over a given period of time. Here, we calculate the…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Year price of meat (per Kg) price of bread price of gas (per Kg) (per It) housing price (monthly rent of 1 bd unit) $1000 1 $10 $20 $1.5 2 $12 $18 $1.5 $1200 Suppose a consumer basket consists of 40 Kg meat, 50 Kg bread, 400 It gas, and a one bedroom apartment for one year. Using the table above, compute the inflation rate in this economy based on CPI between years 1 and 2. 17% 12% 6% 10%Find inflation rate if real interest rate is 3% and nominal interest rate is 4.3%You and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they are taken care of for the next 22 years. (A)Based on the following information, how much life insurance needs to be purchased for the husband using the income approach, if any? (B) How much, if any, needs to be purchased for the wife using the income approach? Assume 3% inflation rate. Market Labor Value Household Production Value Husband $72,000 $15,000 Wife $15,000 $40,000
- The CPI has risen from 130 to 115, what is the inflation rate? 10% 20% 15% 13%If the CPI in period 1 is 180 and the CPI in period 2 is 240, then the rate of inflation between period 1 and period 2 is 66.7% 50% 33.3% 25%In a specified year, nominal gross domestic product grew by 12 percent and real gross domestic product grew by 5 percent.What would be the inflation 7% -7% 8% 179%
- If the annual inflation rate in an economy is i, then $1 borrowed at the beginning of a year will have the same purchasing power as ________ dollars at the end of the year. i (1/i) (1 − i) (1 + i)Henrique is a baseball fan and attends several games per season. His expenses per season are listed in the table below: Year 1 Year 2 5 Baseball Tickets $500 $600 Jersey $100 $120 Food $150 $150 Transport $50 $80 Calculate the inflation rate for Henrique's baseball season between year 1 and 2.Question 7 A company is considering an investment in an item of equipment costing $150,000. Contribution per unit is expected to be $4 and sales are expected to be: Units Year 1 2 3 4 20,000 40,000 60,000 20,000 Fixed costs are expected to be $50,000 at today's price levels and the equipment can be disposed of in year 4 for $10,000 at today's price levels. The inflation rate is expected to be 6% and the money cost of capital is 15%. Required Calculate the NPV of the project: (a) using money cash flows and the money cost of capital (b) using the real value of cash flows and the real cost of capital
- A professional athlete signs a two-year contract in which the earnings c can be modeled by 2,400,000+ 500,000t, where t represents the year (a) Find the actual value of the athlete's contract in dollars. (b) Assuming an annual inflation rate of 3%, what is the present value of the contract in dollars? (Round your answer to the nearest cent.) $ Need Help?Year | price of meat (per Kg) price of bread (per Kg) price of gas (per lt) housing price (monthly rent of 1 bd unit) $10 $20 S1.5 S1000 $12 S18 S1.5 $1200 Suppose a consumer basket consists of 40 Kg meat, 50 Kg bread, 400 It gas, and a one bedroom apartment for one year. Using the table above, compute the inflation rate in this economy based on CPI between years 1 and 2. 10% 12% 6% 17%Inflation The consumer price index (CPI) of a certain country is given by I(t) = -0.02t³ + 0.4+² + 126 (0 ≤ t ≤ 4) of 2013. Find the annual percentage rate of inflation in the CPI of the country at the beginning of 2015. (Round your answer to three decimal places.) where t = 0 corresponds to the beginning %/year