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2 years ago

Assume the nominal rate was 11.50% and the inflation rate was 3%. Using the Fisher Effect, what was the real rate

Business

1 answer:

Finger [1]2 years ago

3 0

The real rate was 8.25%.

Real rate = 8.25%

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Particulars

Fisher formula is (1 + nominal rate) = (1 + real rate) x (1 + inflation rate),

(1+.115) = (1 + realrate) *(1+.03)

(1.115) = (1 + realrate) *(1.03)

1.0825 = 1 + real rate

Real rate = 8.25%.

The nominal interest rate (or interest rate) is the rate of increase in money you pay lenders using borrowed money. Nominal interest rates are often used by banks to represent interest rates on various loans and investments. For example, if your loan has a nominal interest rate of 5%, you can expect to pay $50 in interest for every $1,000 you borrow. At the end of the year he will pay $1,050.

The real interest rate is the interest rate that takes inflation into account. This means it is adjusted for inflation and reflects the real interest rate of a bond or loan. Simply put, this rate reflects the rate of return after taking inflation into account.

Learn more about the inflation rate here: brainly.com/question/777738

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8 0

3 years ago

240 letters is 80% of<br> letters

Burka [1]

i am assuming that you want to find out the total number of letters.

if so,

let 'x' be the total number of letters

so, 80/100*x = 240

80x/100 = 240

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80x = 24000

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total number of letters is 300

3 0

3 years ago

Tanek Corp.'s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statem

inn [45]

Answer:

(a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places.)

total variable costs per unit = $1,750,000 / 500,000 = $3.50

sales price per unit = $2,500,000 / 500,000 = $5

contribution margin per unit = $5 - $3.50 = $1.50

total fixed costs = $850,000

break even point in units = $850,000 / $1.50 = 566,667 units

break even point in $ = 566,667 units x $5 = $2,833,335

(b) Compute the contribution margin under each of the alternative courses of action.

alternative 1) $6 - $3.50 = $2.50

alternative 2) $5 - $3.75 = $1.25

(c) Compute the break-even point in dollars under each of the alternative courses of action. (Round selling price per unit to 2 decimal places and other calculations to 0 decimal places.)

alternative 1:

break even point in units = $850,000 / $2.50 = 340,000 units

break even point in $ = 340,000 units x $6 = $2,040,000

alternative 2:

break even point in units = $760,000 / $1.25 = 608,000 units

break even point in $ = 608,000 units x $5 = $3,040,000

Which course of action do you recommend?

If I had to choose between alternative 1 or 2, I would choose alternative 1.

6 0

3 years ago

Microsoft sells its wireless laser desktop mouse and keyboard for $70. Unit variable costs are$45.60 and fixed costs associated

WARRIOR [948]

Answer:

11,361 units and profit $698,800.00

Explanation:

The break-even point is obtained by dividing fixed costs by contribution margin per unit.

Break-even =fixed costs/contribution margin per unit

In this case, fixed costs are $277,200.

Contribution margin per unit = selling price- variable cost

= $70 - $45.60

=$24.60

Break-even point in units will be

=$277,200/$24.60

=11,361 units

Net income after sales of 40,000 units

Total revenue =sales x volume

=$70 x 40,000

=$2,800,000.00

net income will be $2,800,000.00 -( variable costs+ fixed costs)

=$2,800,000.00- {($45.60 x 40,000) + $277,200}

=$2,8000,000.00 -($1,824,000.00 + $ 277,200)

=$2,8000,000.00- $2,101,200.00

=$698,800.00

A profit of $698,800.00

7 0

4 years ago

uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (retail) w

lisov135 [29]

Answer:

The ending inventory value at cost is ($100,000)

Explanation:

To calculate the cost of ending inventory using the retail inventory method, we need to know:

The cost-to-retail percentage = COGS/ sales during current year = (sales – net markup)/sales = ($2,500,000-$200,000)/$2,500,000 = 92%
The cost of goods available for sale= Cost of beginning inventory + Cost of purchases = $200,000 + $2,000,000 = $2,200,000
The cost of sales during the period = Sales × cost-to-retail percentage = $2,500,000 x 92% = $2,300,000
The ending inventory = Cost of goods available for sale - Cost of sales during the period = $2,200,000 - $2,300,000 = ($100,000)

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4 years ago