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- 2. If the bank paid me 9.98% interest per year and if my actual return (the increase in my purchasing power) was only 5.25%, what was the inflation rate during the year? (Show Work)Assume the following: Spot USDBRL = 5.0500 1YR USD Money Market Rates = 1.50% 1YR BRL Money Market Rates = 9.00% What is the 1YR USDBRL forward rate? (Recall that Money Market Rates are quoted as annualized rates)last year, i took out a loan with an interest rate of 4.24% when inflation was only 1.9%. now inflation is 6.6%. if i were to take out a similar loan todat, what would my interest rate be? (assume the only thing that has changed is the inflation rate)
- A year ago, you invested $1,000 in a savings account that pays an annual interest rate of 6%. What is your approximate annual real rate of return if the rate of inflation was 2% over the year? A. 6% B. 4% C. 2% D. 3%Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year is equivalent to having what amount today? c. Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $650 today is equivalent to having what amount in one year? It is equivalent to $____. (Round to the nearest cent.)Assume inflation is 2.60% and the nominal (annual) interest rate is 6.35%. If the interest rate is held constant, but inflation rises to 5.25%, does it cost more or less in real terms to borrow money than when the inflation rate was 2.60%? Explain your answer and make sure to include your real interest rates in both situation.
- 2. A deposit of $100,000 is placed in an account that pays 7.6% interest per year compounded quarterly. The inflation rate is 3.6% per year. The account is left undisturbed for 15 years. How much money will be in the account? What will be the purchasing power in terms of today’s dollars? What is the real rate of return that is made on the account?P15,000 was due on November 3, 2006. If money is worth 14% compounded semi-annually, the loan was released in November 3, 2002? (a.)What is the nominal rate? (b) What is the effective rate? ((c) What is the real interest rate if inflation rate is 4.6% (base rate: nominal interest rate) (show ur solution)Assume inflation is 2.60% and the nominal (annual) interest rate is 6.35%. If the interest rate is held constant, but inflation rises to 5.25%, does it cost more or less in real terms to borrow money than when the inflation rate was 2.60%? Explain your answer and make sure to include your real interest rates in both situations to earn full credit.
- Suppose you purchase a bank accepted bill with a face value of $100,000. It has 120 days to maturity and is trading at an interest rate of 8% pa. 1.1 What was the purchase price today (Day 0)? 1.2 Suppose you sell the BAB 30 days later. What was the sale price, if the interest rate was 8.0%? 1.3 (Still assuming 30 days later) What was the sale price if the interest rate was 7.5%?1. Suppose that a loan of $9,000 is given at an interest rate of 2% compounded each year. Assume that no payments are made on the loan. Follow the instructions below. Do not do any rounding. (a.) Find the amount owed at the end of 1 year. $_____?(b.) Find the amount owed at the end of 2 years. $_____? 2. If the rate of inflation is 2.5% per year, the future price p(t) (in dollars) of a certain item can be modeled by the following exponential function, where t is the number of years from today. p(t)=2000(1.025)t Find the current price of the item and the price 10 years from today. (Roud your answers to the nearest dollar as necessary.) Current Price: $_____?Price 10 years from today: $_____?Consider a situation, where (a) the equal-payment cash flow of $1,500 in constant dollars over three years is converted from the (b) equal-payment cash flow in actual dollars over three years. at an annual general inflation rate off= 4%. Also, i = 8.5%. What is the amount A in actual dollars equivalent A' = $1,500 in constant dollars?