1. Suppose that you borrow $20,000 at 9%, compounded monthly, over five years. Knowing that the 9% represents the market interest rate, the monthly payment in actual dollars will be $415.17. If the average monthly general inflation rate is expected to be 0.5%, what is the equivalent equal monthly payment series in constant dollars? $359 $405 $415 $375

1. Suppose that you borrow $20,000 at 9%, compounded monthly, over five years. Knowing that the 9% represents the market interest rate, the monthly payment in actual dollars will be $415.17. If the average monthly general inflation rate is expected to be 0.5%, what is the equivalent equal monthly payment series in constant dollars? $359 $405 $415 $375

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 33P: The index number representing the price level changes from 110 to 115 in one year and then from 115...

See similar textbooks

Similar questions

The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
Assume that the economy has an annual inflation rate of 5 percent. Are the followinginvestments profitable in real terms? (d) The spot price of silver is $31 per ounce. You purchase 50 ounces of silver for $1,600,in order to compensate the merchant. Over the year, the spot price of silver rises to $34per ounce, and you are able to sell the silver you have at the spot price. (e) You purchase a Non-Fungible Token (NFT) for $98 million. The following year, you are able to sell it for $102.5 million.
Problem ##1Suppose you borrow $ 20,000 at 9% compounded monthly, for 5 years. Knowing that 9% represents the market interest rate, the monthly payment in current dollars will be $ 415.17. If the average monthly headline inflation rate is expected to be 0.5%, what will be the annual equivalent of equal monthly payments in constant dollars?Set the value for periods N in months and the effective interest per month.
A# man# is# planning# to# retire# in# 20# years.# He# can# deposit# money# for# his# retirement# at# 8%# compounded# monthly.# It# is# estimated# that# the# future# general# inflation# (!)# rate# will# be# 3%# compounded#monthly.#What#deposit,#in# terms#of#constant#dollars, must#be#made#each#month#until# the#man#retires#so#that#he#can#make#annual#withdrawals#of#$20,000,#in#terms#of#actual dollars,#over# the#15#years#following#his#retirement?#(Assume#that#his#first#withdrawal#occurs#at#the#end#of#the#first# year after#his#retirement.)
Suppose that you just purchased a used car worth $14.000 in today's dollars. Assume also that. to finance the purchase. you borrowed $12,000 from a local bank at 8% compounded monthly over two years. ·n1e bank calculated your monthly payment at $542.36. Assume that average general inflation will run at I% per month over the next two years.(a) Determine the annual inflation-free interest rate (i') for the bank.(b) What equal monthly payments, in terms of constant dollars over the next two years, arc equivalent to the series of actual payments to be made over the life of the loan?
If you deposit $10,000 in a bank account that pays a 2% interest compounded monthly for five years,what would be your economic loss if the general inflation rate is 3% during that period?
14.24 Because retail supermarket corporations operate on a low ROR, it is common to use a market MARR of about 3% per year. What real return rate is implied from a market interest rate of 3% per year when the annual inflation rate is 4% per year? Explain your answer. Note:- Please refrain from offering handwritten solutions. Please ensure that your response maintains accuracy and quality to avoid receiving a downvote. Take care of plagiarism. Answer completely. You will get up vote for sure.
Assume a constant inflation rate of 5% annually and 0% interest rate. Over a whole period of 14 years. A real estate investment after 4 years would consume 307,500$. Lasting to 10 years the income is a constant of 170,000$ each year. A) What would be the equivalence selling price for the real estate in year 0?
J 7 Q1. An economy is experiencing inflation at an annual rate of 5.6%. If this continues, what will a P500 bill in 2008 be worth in 2020 in terms of 2008s Peso value? Q2. Krista deposits P20,000 in a bank account at 4.4% compounded quarterly for 5 years. If the inflation rate of 5% per year continues for this period, calculate the purchasing power of the original principal.
Knowing that the average annual accumulated inflation in 2018 was 3.75%, calculate how much the annual real interest on the Treasury Selic investment was - considering that the rate, discounting the Income Tax, was approximately 5.43% in the year.
You just signed a business consulting contract with one of your clients. The client will pay you $80,000 a year for five years for the service you will provide over this period. You anticipate the general inflation rate over this period to be 5%. If your desired inflation-free interest rate (real interest rate) is to be 3% what is the worth of the fifth payment in present dollars? The client will pay the consulting fee at the end of each year.(a) $53,506(b) $54,070(c) $59,498(d)$59,320
If general price inflation is estimated to be 5% for the next 5 years, 7.5% for the 3 years after that, and 3% the following 5 years, at what market interest rate (i) would you have to invest your money to maintain a real purchasing power growth rate (i′) of 10% during those years?