If the rate of inflation is 6.5%, what nominal interest rate is necessary for you to earn 3.3% real interest rate on your investment?

Q: How long will the given principal P take to reach the aiven maturity value A at the given simple…

A: Number of years in simple interest = (1/r) x [(A/P) - 1] A = Total accrued amount (Interest +…

Q: Assume that you are planning Treasury bills. Maturity date is 15, 2023 which means that yo paid 100…

A: T bill is sold on the discount and discount depends on the interest rate and time period of…

Q: Question 2. (5 marks) In general, what is the formula for the present value of an annuity of C…

A: Answer 1 No, it is not practically possible to determine theprecise debt-equity ratio which…

Q: If the annual interest rate is 9% and inflation rate is 5%. What does the tax rate have to be in…

A: Real rate of return=1+annual interest rate1+Inflation rate-1=1.091.05-1=3.8%

Q: T/F and why?

A: Real interest rate is the rate of interest that received by the investor after adjusting the…

Q: 7 How much would an investor need to receive in nominal return if he desires a real return of 4% and…

A: Nominal rate of return is the rate that is calculated after taking into account the effect of…

Q: If inflation in Wonderland averaged about 4% per month in 2020, what was the annual rate of…

A: Annual rate (Nominal) = Monthly Rate * 12 Effective Annual rate (EAR) = [ 1 + ( Annual rate…

Q: If a security currently worth $12,800 will be worth $16,843.93 seven years in the future, what is…

A: Future Value = Present Value * (1 + Interest Rate)^time

Q: If a security currently worth $9,200 will be worth $15,767.18 seven years in the future, what is the…

A: Here,

Q: Calculate the nominal rate of interest given a real rate of 10% and an inflation rate of 6%. A.…

A: Given: Real rate = 10% Inflation rate = 6%

Q: Calculating Interest Rates::

A: An interest rate is the cost of borrowing money or the proportion of return on investment.. It…

Q: B. How long wil the given principal P take to reach the given maturity value A at the given simple…

A:

Q: last year, i took out a loan with an interest rate of 4.24% when inflation was only 1.9%. now…

A: The real interest rate is the inflation adjusted interest rate which is reflecting the increase in…

Q: Suppose the term structure of risk-free interest rates is as shown below. 1 year 5 years 1.96 3.33…

A: Annual payment  at the end of each year 1,2, and 3 = $90TermRate (EAR)1 year1.96%2 years2.39%3…

Q: Use the formula A=P(1+rt) to calculate the maturity value of the simple interest loan when…

A: formula: A=P(1+rt) where, p=principal r=rate  t=time in years

Q: 5. Suppose that the general inflation rate is 5% and the real interest rate is 3%. Find the market…

A: Fisher Equation:  It is the equation that  shows that relationship under the effect of inflation…

Q: Using the following information, determine the real rate of interest: Rate % inflation 0.53 T-bill…

A: Real rate of interest is calculated based on the one year nominal rate of interest and inflation…

Q: F.v= 20,000 P.V= 16,000 n= 3 i= ? Use present and future value formula and find out interest rate.

A: Present Value is the current value of a  future sum of money.

Q: Consider the following spot interest rates for maturities of one, two, three, and four years. r₁ =…

A: Sure, I'll avoid using special symbols and commands. Let's solve the problem using plain text:To…

Q: If the rate of inflation is 4.5%, what nominal interest rate is necessary for you to earn a 2.5%…

A: Nominal interest rate is the simple interest rate that you pay to lender for use of money. Nominal…

Q: If the rate of inflation is 5.8%, what nominal interest rate is necessary for you to eam a 3.4% real…

A: Data given: Rate of inflation (i)=5.8% Real interest rate (r) =3.4% Nominal interest rate (N)=?…

Q: c. The $500,000 EBIT given previously is actually the expected value from the following probability…

A: Time interest earned ratio indicates the ability of company the pay debt and interest on time and it…

Q: Question 2: Given the interest rate determinants information below:   Scenario A Scenario B…

A: Interest rates depicts the cost of borrowings that a borrower has to bear in order to acquire funds…

Q: lation and interest rates What would you expect the nominal rate of interest to be if the real rate…

A: Nominal interest rate is rate which includes both real return and inflation and generally more than…

Q: 6. The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on…

A: Introduction: Fischer effect: Fischer equation of inflation measures the actual and nominal rate of…

Q: The following is a portion of the term structure of interest rates on a particular day: Current…

A: Expectation theory helps in estimating the short term rate of interest based on the long term…

Q: Assume you have the following asset and liability in your Balance Sheet: Asset - Bond A Modified…

A: Modified Duration is simply the slope of the price yield curve. Which shows the $ change in price…

Q: 5. Finding the interest rate and the number of years The future value and present value equations…

A: Present Value is calculated by dividing the future value by the 1+r factor for the given required…

Q: what is the value today of a security that will pay you $46 in three years and $87 six years from…

A: The concept of TVM states that the interest-earning capacity makes the money earned today more…

Q: What will the money rate of interest have to be at a 6% inflation rate to entice people to keep the…

A: given, real rate = 5% inflation= 6%

Q: Lynn Ally, owner of a local Subway shop, loaned $51,000 to Pete Hall to help him open a Subway…

A: Future Value: It represents the expected value of the current amount of the sum. It is computed by…

Q: Assume that the interest rate offered on a CD was 4.8% when the rate of inflation was 2.3%. If the…

A: In this question nominal rate of interest is given so we need to find out the real interest rate.…

Q: Indicate whether the statement is true or false. 1. The number of payments of interest over the…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 5. Suppose it is possible to borrow or save at a risk-free interest rate is 6%. a) Having $300 today…

A: According to time value of money concept, money today has more worth than the same money in future…

Q: Given this is the situation, how should I be calculating the APR for each form of debt? It is…

A: Debt is something that one party borrows from another, usually money. Debt is used to make large…

Q: suppose lender larry values $1 today equal to $2 a month from now, and borrower barry vlaues $1…

A: The Fisher Equation, named after economist Irving Fisher, states the relationship between nominal…

Q: A. 1 year interest rate? b. 2 year interest rate? c. 3 year interest rate? d. 4 year interest…

A: Given:

Q: Suppose the bank will give you 5 percent interest rate for your money on deposit and the rate of…

A: Nominal interest rate (i) = 5% Inflation rate (f) = 3% r = Real rate

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: What would you expect the nominal rate of interest to be if the real rate is 4.2 percent and the…

A: In the given case, we have provided the real rate of interest and the inflation rate.So, to…

Q: What nominal interest rate compounded continuously is equivalent to j4 = 15%? Answer: 14.72 %

A: Compound = n = j4 = Quarterly = 4Interest rate = r = 15%

Q: How long will it take for $570 to grow to $2,700 at the following interest rates? 5.7 9.7 17.7

A: When we make an investment or deposit an amount today it grows with passage of time. This is because…

Q: What would be the return on your investment as a percentage to 6 decimal places if you buy a $5,000…

A: Return on investment: It is the total return that an investment generates in a particular time.

Q: What is the minimum nominal rate of return that you should accept if you require a 4% real rate of…

A: The real rate of return is the rate that is required by the investor for security in real-time. when…

Q: Q12- Assuming that the interest rate is 6%, which of the following investments has a higher…

A: Interest rate = 6%   Calculation of investment X duration Period Cash flow PVF(6%,Period) Present…

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.