Currently, interest rate on euro is near zero while the (Fed Funds) interest rate on dollar is about 2.5%. We expect the 6-month forward rate of euro (vs dollar) to be higher than the spot rate of euro. Please indicate if this statement is true and provide a short explanation.
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- In wisely planning for your retirement, you invest $27,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.6% per year. How much will you be able to withdraw each year for 18 years, starting one year after your last deposit? The amount that you will be able to withdraw each year is $Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 3.2%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 2.1% in the U.S. and 3.6% in the U.K. for the next three years. The GBP/USD rate is currently 1.3081. What is your expected future spot for GBP/USD three years from now? (X.XXXX)Define conversion to constant dollars
- You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $1,200 a month in a stock account in real dollars and $545 a month in a bond account in real dollars. The effective annual return of the stock account is expected to be 11 percent and the bond account will earn 7 percent. When you retire, you will combine your money into an account with an effective annual return of 8 percent. The inflation rate over this period is expected to be an effective annual rate of 4 percent. a. How much can you withdraw each month from your account in real terms assuming a withdrawal period of 25 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the nominal dollar amount of your last withdrawal? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)XYZ corporation has budgeted P300,000 per year to pay for labor over the next five years. If thecompany expects the cost of labor to increase by P10,000 each year, what is the expected cost ofthe labor in the first year, if the interest rate is 10%Your rich aunt is going to give you an end-of-year gift of $1,000 for each of the next 10 years. The general price inflation is expected to average 6%per year during the next 10 years, and the real interest rate is 4% per year. a. What is the equivalent value of these gifts at the present time? b. What is the current PW of the gift? c. What is the MARR?
- HP a US-based corporation exports computer printers to Brazil, whose currency, there is (symbol R$) has been trading at R$3.40/US$. Exports to Brazil are currently 50,000 printers per year at the reais equivalent of $200 each. A strong rumor exists that the reais will be devalued to R$4.00/$ within two weeks by the Brazilian government. Should the devaluation take place, the reais is expected to remain unchanged for another decade. Accepting this forecast as given, HP faces a pricing decision that must be made before any actual devaluation: HP may either (1) maintain the same reais price and in effect sell for fewer dollars, in which case Brazilian volume will not change, or (2) maintain the same dollar price, raise the reais price in Brazil to compensate for the devaluation, and experience a 20% drop in volume. Direct costs in the U.S. are 60% of the U.S. sales price. What would be the short-run (one-year) implication of each pricing strategy? Which do you recommend?In wisely planning for your retirement, you invest $22,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 3.2% per year. How many future dollars will you have in the account immediately after your last deposit? You will have $ future dollars in your account immediately after your last deposit.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.
- The total amount of money in an account with P dollars invested in it is given by the formula A=P+PrtA=P+Prt, where r is the rate expressed as a decimal and t is time (in years).If $552$552 is invested at 9%9%, how much money will be in the account after 2121 months? Round your answer to two decimal places if necessary.Qs 15: Which one of the following statement regarding Factor of Production is correct? (a) It is the input that a firm uses in the production process. (b) It is the output which is produced in the production process. (c) It is the additional input that is required to achieve the maximum output. (d) It is the ratio of the output to that of the input of the production process.Today you borrowed $90,000 from a bank at an interest rate of 10.25%, compounded monthly. You are supposed to repay the loan and its interest charges in equal monthly payments over a 15-year period, with the first payment in a month from now. The estimated annual inflation rate is 6%, compounded monthly.(a) What is the amount of your monthly payments?(b) What is the bank's real effective annual rate of return on this deal after taking inflation into account?