Your bank charges him an interest rate of 4% over the next year. the real the beginning of the loan contract is 3%, then which of the given rate of expected inflation over the upcoming year would be the most beneficial to you as the lender? An inflation rate_____________ A) below 0% B) greater than 3%. O C) between 0% and 3%. D) equal to 1%.
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- Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.Interest RatesSuppose that you make a loan of $1,500 to your friend at a rate of 10% interest because you expect the inflation rate to be 5%.a) By how much does your purchasing power increase once the loan is completely paid off?b) Assuming that after the loan was repaid, you discovered that inflation rate over the life of the loan was only 2%. Who gained?Suppose you are about to borrow $16,000 for four years to buy a new car. Which of these situations would be preferred? OA. The interest rate on the loan is 15%, and the annual inflation rate over the next four years is expected to average 5%. OB. The interest rate on the loan is 9%, and the annual inflation rate over the next four years is expected to average 3%.
- Year | price of meat (per Kg) price of bread (per Kg) price of gas (per lt) housing price (monthly rent of 1 bd unit) $10 $20 S1.5 S1000 $12 S18 S1.5 $1200 Suppose a consumer basket consists of 40 Kg meat, 50 Kg bread, 400 It gas, and a one bedroom apartment for one year. Using the table above, compute the inflation rate in this economy based on CPI between years 1 and 2. 10% 12% 6% 17%Henrique is a baseball fan and attends several games per season. His expenses per season are listed in the table below: |Year 1 |Year 2 5 Baseball Tickets Jersey Food Transport $500 $600 |$100 $150 $50 |$120 $150 $80 Calculate the inflation rate for Henrique's baseball season between year 1 and 2. 18.5% O0.18% 15.8% O1.6%Suppose Neha is a cinephile and buys only movie tickets. Neha 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. Initially, the purchasing power of Neha's $3,000 deposit is movie tickets. For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Neha's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Neha will not buy…
- Assume a constant inflation rate of 5% annually and 0% interest rate. Over a whole period of 14 years. A real estate investment after 4 years would consume 307,500$. Lasting to 10 years the income is a constant of 170,000$ each year. A) What would be the equivalence selling price for the real estate in year 0?If inflation has been 2% each year for the past 3 years, and over that time your salary has increased from $80,000 per year to $84,000 per year, then your real wage has Not changed Increased by more than nominal wage has increased. Increased by less than nominal wage has increased. DecreasedYear price of meat (per Kg) price of bread price of gas (per Kg) (per It) housing price (monthly rent of 1 bd unit) $1000 1 $10 $20 $1.5 2 $12 $18 $1.5 $1200 Suppose a consumer basket consists of 40 Kg meat, 50 Kg bread, 400 It gas, and a one bedroom apartment for one year. Using the table above, compute the inflation rate in this economy based on CPI between years 1 and 2. 17% 12% 6% 10%
- X₁ 4) If the effective annual interest rate is 9% per year and inflation is 3.8% per year what is the true annual interest rate? annual interest rate = effm = (1 + 0.091) nomiral= 0.7207 12 = 8.6484- anal interest rate= 13,8\8,6484 = 12.4481, nomiral tinflation = 0.007 207 ~ 0,7207 1 monthlyYou and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they are taken care of for the next 22 years. (A)Based on the following information, how much life insurance needs to be purchased for the husband using the income approach, if any? (B) How much, if any, needs to be purchased for the wife using the income approach? Assume 3% inflation rate. Market Labor Value Household Production Value Husband $72,000 $15,000 Wife $15,000 $40,000Suppose Rosa is a cinephile and buys only movie tickets. Rosa deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. 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 $10.00. Initially, the purchasing power of Rosa's $3,000 deposit is movie tickets. 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 Rosa'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 Rosa will not buy…