Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Question
Chapter 15, Problem 31P
To determine
Compute the constant–dollar interest rate for a periodic interest rate of 9% and an inflation rate of 4%.
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The annual inflation rate is expected to be 4.78% and the nominal (annual) interest rate is 5.75%. What is the real interest rate?
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Chapter 15 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 15 - On what three things is equivalence based?Ch. 15 - Prob. 2DQCh. 15 - How do you find the interest rate at which two or...Ch. 15 - Prob. 4DQCh. 15 - How does inflation affect interest rates?Ch. 15 - Prob. 6DQCh. 15 - What is the future value, ten years from now, of...Ch. 15 - What is the future value, ten years from now, of...Ch. 15 - Prob. 9PCh. 15 - Prob. 10P
Ch. 15 - Prob. 11PCh. 15 - What is the future value, five years from now, of...Ch. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Prob. 15PCh. 15 - Prob. 16PCh. 15 - Prob. 17PCh. 15 - Prob. 18PCh. 15 - Prob. 19PCh. 15 - Prob. 20PCh. 15 - Prob. 21PCh. 15 - Determine the future value at the end of June for...Ch. 15 - Prob. 23PCh. 15 - Prob. 24PCh. 15 - Prob. 25PCh. 15 - Prob. 26PCh. 15 - Prob. 27PCh. 15 - Prob. 28PCh. 15 - Prob. 29PCh. 15 - At what periodic interest rate is a 4,000 cash...Ch. 15 - Prob. 31PCh. 15 - Prob. 32PCh. 15 - Prob. 33PCh. 15 - Prob. 34PCh. 15 - How much money needs to be set aside today to...Ch. 15 - How much money needs to be set aside today to...
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- What would you expect the nominal rate of interest to be if the real rate is 5.3 percent and the expected inflation rate is 2.8 percent?arrow_forwardTreasury bills are currently paying 9 percent and the inflation rate is 4.5 percent. What is the approximate real rate of interest?arrow_forwardSuppose the actual inflation rate is 2% over the next year. Once the loan has been repaid, what is the nominal rate of interest and real rate of interest?arrow_forward
- Suppose the inflation rate is compounded annually at 3% APR. Do you prefer compounded semiannually at 5% APR nominal interest rate or compounded quarterly at 2% real interest rate?arrow_forwardIf Treasury bills are currently paying 3.05 percent and the inflation rate is 1.89 percent, what is the approximate real rate of interest? The exact real rate? Can the calculator and excel solution be provided?arrow_forwardAssume the nominal interest rate is 12 percent and the expected rate of inflation is 8 percent. Calculate real rate of interest. Now assume instead that the nominal interest rate is 4 percent and the expected rate of inflation is minus 2 percent. Calculate the real rate of interest. Assume the expected rate of inflation is 6 percent per year. What nominal interest rate should you charge to receive a real interest rate of 2 percent per year?arrow_forward
- What is the real interest rate given a nominalrate of 8.4%, and an inflationrate of 2.0%arrow_forwardQuestion #21 is attacthed below in image. Based on the spot rates in Problem 21, and assuming a constant real interest rate of 2 percent, what are the expected inflation rates for the next four years?arrow_forward(Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 3.6 percent and the expected inflation rate is 6.8 percent?arrow_forward
- Suppose the real rate is 3.1 percent and the inflation rate is 4.7 percent. What rate would you expect to see on a Treasury bill?arrow_forward(Inflation and Interest rates) What would you expect the nominal rate of interest to be if the real rate is 4.1 percent and the expected inflation rate is 6.6 percent ? The nominal rate of interest would be ____ % (Round to two decimal places.)arrow_forwardIf the interest rate on one year govt. bonds is 6.0% and the inflation rate is 2.0%, what is the real interest rate?arrow_forward
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