f the rate of inflation is 3.9% per year, the future price pt (in dollars) of a certain item can be modeled by the following exponential function, where t is the number of years from today. =p (t)= 600(1.039)t Find the current price of the item and the price 10 years from today. Round your answers to the nearest dollar as necessary.
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If the rate of inflation is
3.9%
per year, the future price
pt
(in dollars) of a certain item can be modeled by the following exponential function, where
t
is the number of years from today.
=p (t)= 600(1.039)t
Find the current price of the item and the price 10 years from today.
Round your answers to the nearest dollar as necessary.
Step by step
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- Construct a spreadsheet to convert a nominal interest rate compounded m times per year i(m) and convert it to an effective rate jn per 1/n of a year. On the same spreadsheet, also start with an effective rate jm per 1/m of a year and convert it to a nominal rate i(n) compounded n times per year. Use your spreadsheet to solve the following two problems: Given the nominal rate i(12) = 5.700%, find the equivalent effective semi-annual rate. Given the effective semi-annual rate j2 = 2.884%, find the equivalent nominal rate ¡(12).If we require a 10% real return and we expect inflation to be 7%. Calculate the nominal rate of interest using the fisher effect equation and it's approximation. What is the difference between the two? Respuesta:Suppose 1 year T Bills currently yield 7.00% and the future inflation rate is expected to be constant at 4.70% per year. What is the real risk free rate of return, rf? Round your answer to the nearest tenth of decimal point
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