Answered: Why do the selling prices of…

Business

Economics

Why do the selling prices of depreciable assets increase with the general inflation rate?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 8SQP

See similar textbooks

Related questions

Q: Assuming a 1-year, money market account investment at 4.57 percent (APY), a 2.49% inflation rate, a…

A: Assuming a 1-year, money market account investment at 5.09 percent (APY), a 3.21% inflation…

Q: What is the gain or loss on purchasing power for 2021? (if LOSS, put a negative (-) sign before the…

A: Answer- Consumer Price Index :- It is the a measure which help calculate the change in price level…

Q: Solve this attachment.

A: The interest rate is the amount of payment that is charged by a lender on a borrower for the use of…

Q: What is the uninflated present worth of a P 200,000 future value in two years if the average…

A: Market interest rate (IM) can be calculated by using the following formula.

Q: Maddie buys a new apartment for $500,000 at the beginning of 2020. At the end of 2020 an identical…

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

Q: It is the increase in the prices for goods and services from one year to another, thus decreasing…

A: Inflation rate is the rate at which the prices of goods and services in an economy rise over time.…

Q: A bank currently has deposits of $80000. It has actual reserves of $6000 of which $2000 are excess…

A: Actual reserve is sum of required reserve and excess reserve Actual reserve = Required reserve +…

Q: (1-3) Spartanville is a small country off the coast of Western Canada that relies heavily on the…

A: Inflation: Inflation refers to the situation where the general price level in an economy have…

Q: Creditors and debtors tend to lose during an inflationary period since: (1) The nominal interest…

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

Q: SA inflation eases slightly in January Inflation eased to 5.7% in January, down from 5.9% the month…

A: 3. The correct option is (d) The Slowdown phase From the above extract, the South African economy is…

Q: A payment is said to be ________________ if it is automatically adjusted for inflation. Question…

A: Inflation occurs when the price level of all goods and services in the economy experiences a…

Q: ne Bank of Canada maintains an operating band for the overnight interest rate of a. 50 percent of…

A: There is a system of "operating bands" for overnight trading at the Bank of Canada. These bands are…

Q: man desires to have P3M money in his savings when he retires after 25 years. This has amount in the…

A: Future worth is the value of a assets at a particular date. It estimates the ostensible future…

Q: Lorikeet Corporation has a foreign subsidiary located in a country experiencing high rates of…

A: Inflation is defined as a rate at which the value of a currency in an economy is falling, while the…

Q: An economy is experiencing inflation at an annual rate of 5.6%. If this continues, what will a P500…

A: In the question, it is given that The annual rate of inflation is 5.6% or 0.056. The time period is…

Q: a) Find a regress 2010 Index = %3D (Round to three

A: Country Male 2007 (x) Male 2010(y) x * y x * x 1 23.6 21.8 514.48 556.96 2 12.4 11.8 146.32…

Q: You are planning to save for retirement over the next 30 years. To save for retirement, you will…

A: Present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Q: As of July 2012, the 12 month CPI inflation rate was 1.4 percent and the 12 month core CPI inflation…

A: A). Core CPI inflation takes the price trend prevailing in energy sector & food sector where as…

Q: a man deposit P50000 in a bank account at 6% compounded monthly for 5 years. If the inflation rate…

A: Inflation: It refers to a economic condition under which the price of goods and services increases.…

Q: Explain Effects of Inflation on Projects with Depreciable Assets?

A: Inflation leads to the biasness in the valuation of an investment project with the depreciable…

Q: 1. Consider a real return bond with a face value of $15,000 and a coupon yield of 5.2%. What is the…

A: The nominal or ostensible yield to be paid by the issuer on the bond at the time of issue is known…

Q: Define the term inflation-adjusted required rate of return?

A: The required rate of return refers to the minimum level of a return that is expected out of an…

Q: mplication of inflation rate of the Philippines over the years

A: The rate of inflation is that the percentage change during a particular period's index relative to a…

Q: Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require…

A: A real interest rate is the one modified to eradicate the impacts of inflation, so that the…

Q: Give 5 functions of the BSP when a society suffers from high inflation rate.

A: The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Philippines, it was established on…

Q: An asset costs $10,000 today. If inflation is 4% per year and interest is 12% per year, what will be…

A: In economics, present value refers to the current value of a future stream of cash flow. Future…

Q: SA inflation eases slightly in January Inflation eased to 5.7% in January, down from 5.9% the month…

A: In the given situation, it is said that inflation eased to 5.7% down from 5.9% the month prior. This…

Q: What are the Effects of Inflation on Project Cash Flows?

A: Answer: Inflation refers to the increase in the average price level of different goods and services.…

Q: Required information In wisely planning for your retirement, you invest $18,000 per year for 20…

A: Answer; First finding Nominal interest rate : Nominal interest rate = [ ( 1+ real interest…

Q: Explain how Depreciation Allowance under Inflation?

A: Inside these laws of unique cost depreciation, the absolute estimation of the duty exclusions in…

Q: Company ABC purchased equipment worth Euros from an Italian co. at the beginning of the year. The…

A: Foreign Currency exchange can be presented in either direct quote or indirect quote. A direct…

Q: ! Required information In wisely planning for your retirement, you invest $34,000 per year for 20…

A: Nominal return= real return inflation =10%+3.3%=13.3% n=20 A=$34000 FV=A*((1+r)^n-1)/r

Q: Inflation

A: Inflation: It refers to the increase in the prices of goods and services in the market. The more…

Q: Average inflation rate is _ the values of the highest and lowest individual inflation rates A always…

A: Below is the formula for inflation: Inflation = Current CPI - Initial CPICurrent CPI×100CPI =…

Q: Over the past year (from 1 year ago to today), the inflation rate was 4.31%, the risk-free rate was…

A: The correct answer is given in the second step.

Q: SA inflation eases slightly in January Inflation eased to 5.7% in January, down from 5.9% the month…

A: Inflation: Inflation is a term used in economics to describe an increase in the overall price level…

Q: 2a, In 2000, the value of the Consumer Price Index was 171.20 and the price of gasoline (per gallon)…

A: In order to find the general inflation rate, we will find percentage change in the consumer price…

Q: What was the impact of COVID-19 on inflation in South Korea?

A: In this corona Era, South Korea country has become the second-largest epicenter of the spreading…

Q: a year. In 19 years how much will you need to earn per year to maintain the same purchasing power if…

A: We use the formula to find maintain income if inflation is 1.50% per year

Q: A property was purchased on December 31, 2016 for 20 million pesos. The general price index in the…

A: A general price index in the economy measure the aggregate price levels in the economy. The price…

Q: SA inflation eases slightly in January Inflation eased to 5.7% in January, down from 5.9% the month…

A: Inflation focuses on the quantitative measure of the rate at which the prices of specific goods and…

Q: How can the Equivalence Calculations be performed under Inflation?

A: Inflation is a condition where the real purchasing power of consumer will decrease, and overall…

Q: year. The transaction was denominated in Euros. The exchange rate at the time Was US Euro. However,…

A: Foreign Currency exchange can be presented in either direct quote or indirect quote. A direct…

Q: Company A recently bought software licenses for $100,000 for the first year, renewable each year for…

A: Given: License cost=$100000 Inflation rate for next 3 years=3% Inflation rate for 5th year=5% To…

Q: If the real growth of money interest rate for the past year has been 4% and the general inflation…

A: Given: Nominal rate = 4% Inflation rate = 2.5%

Q: If a company predicted rate of inflation goes down (deflation), what happens to the net present…

A: Net present price (NPV) is the distinction among the prevailing cost of cash inflows and the…

Question

Why do the selling prices of depreciable assets increase with the general inflation rate?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

Step 1

Any asset that is applicable for the treatment of depreciation is known as a depreciable asset. Depreciation means decline in the estimation of benefit inside its valuable life because of mileage of asset or the asset ends up outdated. Depreciation doesn't include money exchange rather it demonstrates how much the benefit worth has been utilized over a period.

Step by step

Solved in 2 steps

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

How do we obtain the general inflation rate?
How can the Equivalence Calculations be performed under Inflation?
What are the types of Inflation? Identify the percentage rate of price increase per type.
How can we calculate the average general inflation rate from the base period?
Hyperinflation has struck your country! Over the past year the price of a loaf of bread has increased from $2 to $52,858. What is the annual rate of inflation suggested by this increase? Put your answer in percentage form (e.g. 30.57 not 0.3057) and then round to two decimal places.
How might your personal inflation rate differ from the average inflation rate as measured by the Consumer Price Index?
How can we calculate the average inflation rate?
A man deposited his first paycheck of $2000 into a long-term savings account at a bank at an interest rate of 12% in 1951 as a gift to his future grandchild. Assume a steady inflation rate of 8%. If his grandchild withdraws that money today in 2021, how much actual money did they withdraw? How much purchasing power would this withdrawal have in 1951?
What is the procedure of Handling Multiple Inflation Rates?
An investment offers a total return of 13.8 percent over the coming year. You believe the total real return will be only 9.4 percent. What do you believe the exact inflation rate will be for the next year?
What would be the inflation rate in Alaska if Nominal interest rate is 2% and real interest rate is 0.6%