We have the following price level data: Year 1 is 500 Year 2 is 550 Year 3 is 638 Year 4 is 638 Calculate:a) the inflation rate in year 3 to the base year b) the first-year CPI, c) the inflation rate in year 4 to the base year d) the inflation rate in year 3 to the previous year
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We have the following
Year 2 is 550
Year 3 is 638
Year 4 is 638
Calculate:a) the inflation rate in year 3 to the base year
b) the first-year CPI,
c) the inflation rate in year 4 to the base year
d) the inflation rate in year 3 to the previous year
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- As an innovative way to pay for various software packages, a new high-tech service company has offered to pay your company, Custom Computer Services (CCS), in one of three ways: (1) pay $400, 000 now, (2) pay $1, 000, 000 5 years from now, or (3) pay 5 equal annual installments of $140, 000. If you, as president of CCS, expect to earn a real interest rate of 1/9 ~ 11.11% per year when the inflation rate is 12.5% per year, which offer should you accept? Justify your answer by showing that equivalent value of each option at some common point in time. Please explain well"Consider the following cash flow in actual dollars. The inflation rate is 3.2%. The inflation-free interest rate is 9.1%. What is the net present worth of the cash flow based on the market interest rate?The cash flow in actual dollars for year 0 through 3 is -$78, $18, $18, and $41 respectively. Round your answer to the nearest cent."Calculate the real interest rate per month if the nominal inflation-adjusted interest rate per year, compounded monthly, is 18% and the inflation rate per month is 0.5%.
- The following represents the inflation rates of foreign country X for the past 5 years: Year 1: 35% Year 2: 20% Year 3: 25% Year 4: 30% Year 5: 15% Which statement is correct about the selection of a functional currency for country X at the end of year 5. a. Country X is highly inflationary; the US dollar must be used b. Country X is highly inflationary; the foreign currency must be used c. Country X is not highly inflationary; the US dollar must be used d. Country X is not highly inflationary; either the US dollar or the foreign currency may be used depending on the factors to determine the functional currency e. Country X is not highly inflationary; the foreign currency must be usedThe following table pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of apples and 7 bushels of almond . Year Price of Apples (Dollars per bushel) Price of Almond (Dollars per bushel) Year 1 12 5 Year 2 9 11 Refer to Table 24-1. If Year 1 is the base year, then the inflation rate in Year 2 wasCalculate the inflation-adjusted interest rate when the annualized inflation rate is 7% per yar and the real interest rate is 4% per year..
- If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was a. 1.06 percent b. 6 Percent c. 10.6 percent d. 106 percentConsider the following price information: Year 1 Year 2 Cup of Coffee $0.5 $1.00 Glass of Milk. $1.00 $2.00 a. Based on the information given, what was the inflation rate between year 1 and Year 2 b. What happened to the price of coffee relative to that of milk between year 1 and year 2For a nominal inflation-adjusted interest rate of 24% per year compounded monthly, calculate the real interest rate per month when the inflation rateis 0.5% per month.
- Calculate the inflation-adjusted interest rate when the annualized inflation rate is 7.9% per year and the real interest rate is 3.6% per year. The inflation-adjusted interest rate is %.Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $15.00. For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Cho's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Cho will not buy seven-tenths of a movie ticket. Number of tickets Cho can purchase options:…Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $15.00. For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Cho's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Cho will not buy seven-tenths of a movie ticket. Fill in the annual inflation chart Choices…
