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- Why do you mink the U.S. experience with inflation over the last 50 years has been so much milder than in many other countries?If the real discount rate is 7% and the inflation rate is 10%, Which of the follo ing interest rates ill be sed to find the present orth of a which of the following interest rates will be used to find the present worth of a series of cash flows that are in constant-worth dollars? a. 10.0% b. 17.7% c. 7.0% d. 10.7%.If the inflation rate is 3 percent and the nominal interest rate is 8 percent, how much is the after-tax real interest rate if the government imposes a 20 percent interest income tax? O a. 3.4 percent O b. 4 percent O c. None of the above O d. 5.4 percent.
- Supposethat on January 1 2009, the TL price of thedollar is 1.40 overtheyear, inflation rate in Turkey is 25 % and U.S. inflation rate is 10%. Iftheexchange rate is $1= 1.50 TL at theend of theyear, whichcurrencyappearto be overvalued.?Explain your answer.In 2008 the price index was calculated at 137.9 with 2003 as the base year. In 2009 the price index increased to 148.7. What was the inflation from 2008-2009? O 7.8% O 7.3% O 10.8%a1. You learn on the business channel that inflation was about 0.8% last month. Assume this rate is maintained each month for a year. What will the annualized rate be? EXAMPLE: A rate of 0.1% per month represents (1 + 0.001)^12 -1 = 0.0121 or 1.21% annually. a2. Your sales grew 4% last year. EXAMPLE: A 2% growth rate for the year would require 1.02 = (1 + r)^12. Solve this for r: See image ; r = .00165 or .165% per month on average. What average monthly growth rate is needed to give the 4% growth?
- Suppose that you just purchased a used carworth $8,000 in today’s dollars. Suppose also thatyou borrowed $8,000 from a local bank at 9% compounded monthly over two years. The bank calculated your monthly payment at $365.48. Assumingthat average general inflation will run at 0.5% permonth over the next two years,(a) Determine the monthly inflation-free interestrate (i′) for the bank.(b) What equal monthly payments (in terms of constant dollars over the next two years) are equivalent to the series of actual payments to be madeover the life of the loan?Please do both question Question 1 Simple Interest of $234.3 is owed on a loan of $575 after four years and four months. What is the annual inerest rate? {Enter the value of the interest rate below and round your answer to one decimal point eg. X.X} Question 2 If you put $800 in a bank today that pays (a) 8% interest per year, how much money could be withdrawn 17 years from now? (Round your answer to the nearest dollar) $ (b) 8% simple interest per year, how much money could be withdrawn 17 years from now? (Round your answer to the nearest dollar) $Assume the following: Spot USDBRL = 5.0500 1YR USD Money Market Rates = 1.50% 1YR BRL Money Market Rates = 9.00% What is the 6MO USDBRL forward rate? (Recall that Money Market Rates are quoted as annualized rates)
- If an investment has a nominal return of 3.8% per year, while the inflation is expected to be 3.6% per year, what would be its real return? What if the inflation is 4.2%?If the real interest rate is 11% and the rate of inflation is 3%, then if a firm can invest in a piece of machinery of $7,500 that will provide a profit stream of $3,000 per year for the next 3 years, what should the firm do? A. Invest in the machine b. Do not invest in the machine.Hula hoop fabricators cost 100 $ each. The Hi-Ho Hula HOOP Company (HHHHC) is trying to decide how many of these machines to buy. HHHHC expects to produce the following number of hoops each year for each level of capital stock shown. Number of Fabricators Number of hoops produced per year 0 0 1 100 2 150 3 180 4 195 5 205 6 210 Hula hoops have a real value of 1 $ each. HHHHC has no other costs of Fabricators. Find the expected future marginal product of capital (MPKf) in terms of Dollars for each level of capital. If the real interest rate is 12 % per year and the depreciation rate of capital is 20 % per year, find the user cost of capital. How many fabricators should HHHHC buy? Repeat part (b) for real interest rate of 8 % per year. Repeat part (b) for a 40 % tax on HHHHC sales revenue. A technical innovation doubles the number of hoops a fabricator can produce. How many fabricators should HHHHC buy when the real interest…
