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If the rate of inflation is 5.7 %, what nominal interest rate is necessary for you to earn a 2.2 % real interest rate on yourinvestment?
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- Suppose you want to earn a real interest rate of 5%. For inflation rates of 0.0, 1.0, 2.0, …, 9.0, 10.0, 15.0, 20.0, and 50.0%, determine the combined rate of interest you must earn.You are given a loan with a nominal interest rate of 5%. You must pay back this loan one year from now. Over the next year inflation is at 4%. In real terms what is the effective interest rate you must pay the loan back at after adjusting for inflation?Suppose that the inflation rate during a year is 5 per cent. During that year, you deposited $500 in your bank account and received an annual nominal interest rate of 10 per cent. What is the real purchasing power of your deposit at the end of the year? $500 $550 $525 $523
- Suppose your annual nominal income for the next four years is $78,500, and the annual inflation rate is 7.1%. Calculate the real value of your $78,500 salary at the end of the fourth year.Assume your salary is $55,000 in 2015 and $160,000 in 2045. If inflation has averaged 2% per year, what is the real or differential inflation rate of salary increases?You purchase a certificate of deposit that pays an advertised rate of 2.30% interest per year. Your real rate of return if the actual inflation rate is 1.75% is ____% [round to the nearest hundredth of a percent].
- Suppose the annual nominal interest rate on bank certificate of deposit is 12%. How much is the real interest rate if the inflation rate is 13%?If the bank posts a nominal interest rate of 7 per cent per year and the inflation rate is 5 per cent per year, then the real interest rate would be __%.Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the end of the year. Assuming no inflation, what is the real interest rate? What would the interest rate be if the $250 of interest had been discounted at the time the loan was made? What would the interest rate be if you were required to repay the loan in 12 equal monthly installments?
- If the expected real interest rate of 5% and expected inflation rate of 3%, then the nominal interest rate in year t is approximatelyAssume you just deposited $1,000 into a bank account. The current real interest rate is 2%, and inflation is expected to be 6% over the next year. What nominal rate would you require from the bank over the next year? How much money will you have at the end of one year? If you are saving to buy a fancy bicycle that currently sells for $1,050, will you have enough money to buy it?If an investment of P24,500 twenty-four years ago is now worth P55,000, at what rate, compounded semi-annually, did it earn? What is the nominal rate, effective rate and real interest rate if inflation is 4.6% (base rate: nominal interest rate)?(show ur solution)
