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Musya8 [376]
2 years ago
10

How to solve the time value of money problems​

Business
1 answer:
erastova [34]2 years ago
8 0

Answer:

The Time Value of Money formula is FV = PV x [ 1 + (i / n) ] (n x t)] where V is the Future value of money, PV is the Present value of money, i is the interest rate, n is the number of impounding periods per year, and t is the number of years.

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1. Given the nominal interest rate of 17​% and the expected inflation of 13​%, then the value of the real interest rate is ___ ?
Veronika [31]

Answer:

According to fisher equation

(1+nominal Interest rate)=(1+real interest rate)(1+inflation)

1) So 1.17=(1+R)(1.13)

1+R=1.17/1.13

R=1.035-1

R=0.0353

Real interest rate = 3.53 percent

2) (1+NIR)= 1.03*1.04

  1+ NIR= 1.072

NIR= 0.072

Nominal interest rate = 7.2 percent

A lender prefers a higher real interest rate as he will earn more money on the amount he has lend if the real interest rate is higher.

A borrower will prefer a lower real interest rate as he will have to pay lower interest payments on an amount if the real interest rate is lower.

Explanation:

6 0
3 years ago
Commercial banks create money throughmaking loans. facilitating borrowing from the Federal Reserve to the public. printing treas
Butoxors [25]

Answer:

making loans

Explanation:

Commercial bank is the bank where the most of the people do their banking. Here the money is to be provided and the interest is also earned from such loans like mortgage, auto loans, business loans, personal loans, etc

Therefore as per the given situation, the commercial bank would earned by the money by providing the loans or making the loans

Hence, the first option is correct

7 0
2 years ago
All competitive advantages have:________1. a limited life. 2. unrestricted sustainability. 3. protections against imitability. 4
dimulka [17.4K]

Answer:

The answer is the ability to earn above average returns indefinitely

Explanation:

To earn above the average returns are form of returns in excess of what an investor expects to earn from other investments with similar amount of risk. This gives an ability to manufactures to produce at the lowest cost, which is an advantage to organizations.

7 0
3 years ago
Read 2 more answers
Monopolists want to protect their market position by – potential competitors. A common tactic is to lobby for –, such as –. Such
mixer [17]

Answer:

restricting the entry; trade restrictions; import tariffs; rent-seeking; monopoly

Explanation:

Monopolists want to maximize their profits by keeping the potential competitors out of the market. For restricting the entry of potential firms they adopt the practice of lobbying for trade restrictions which restrict entry. One such restriction is importing tariff which will reduce competition from foreign products. Such lobbying can be defined as a form of rent-seeking which means using political means to secure monopoly position.

8 0
3 years ago
On December 1, Miser Corporation exchanged 2,000 shares of its $25 par value common stock held in treasury for a parcel of land
Allushta [10]

Answer:

Capitalized value = $188000

Explanation:

Land should be capitalized by fair market value of share exchanged less any recovery of scrap as land will be developed for future plant.

Fair value of shares = $50*4000 = $200000

Less: value of scrap = $12000

Capitalized value = $188000

8 0
3 years ago
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