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3 years ago

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

Business

1 answer:

Veronika [31]3 years ago

6 0

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:

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Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt–equity ratio o

algol13

Answer:

A. $516,000

B. $696,600

Explanation:

A. Calculation to to determine the value of the Company's equity

First step is to calculate the Net income

Sales1,540,000

Less: Cost of goods sold790,000

Less: General and administrative costs525,000

Less: Interest expenses53,000

Income before corporate tax 172,000

Less: Corporate tax 40% 68,800

(40%*172,000)

Net income103,200

(172,000-68,800)

Now let determine the value of the Company's equity using this formula

Value of the Company's equity

= Net income/ cost of the firm’s levered equity

Let plug in the formula

Value of the Company's equity = $103,200/0.20

Value of the Company's equity = $516,000

Therefore The Value of the Company's equity is $516,000

B. Calculation to determine the total value of Company equity

First step is to calculate the Debt

Debt equity Ratio = 0.35

Debt/Equity = 0.35

Debt/ $516,000 = 0.35

Debt = $516,000 * 0.35

Debt =$180,600

Now let determine The Company’s value using this formula

Company’s Total value = Equity + Debt

Let plug in the formula

Company’s Total value = $516,000 + $180,600

Company’s Total value = $696,600

Therefore the total value of Company equity is $696,600

7 0

3 years ago

Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfoli

statuscvo [17]

Answer:

The expected return on a portfolio is 14.30%

Explanation:

CAPM : It is used to described the risk of various types of securities which is invested to get a better return. Mainly it is deals in financial assets.

For computing the expected rate of return of a portfolio , the following formula is used which is shown below:

Under the Capital Asset Pricing Model, The expected rate of return is equals to

= Risk free rate + Beta × (Market portfolio risk of return - risk free rate)

= 8% + 0.7 × (17% - 8%)

= 8% + 0.7 × 9%

= 8% + 6.3%

= 14.30%

The risk free rate is also known as zero beta portfolio so we use the value in risk free rate also.

Hence, the expected return on a portfolio is 14.30%

6 0

4 years ago

Which of the following best describes a surplus?

muminat

Answer:

C. there is more supply than demand

Explanation:

surplus means extra so there's more in supply than demand

7 0

3 years ago

Read 2 more answers

Which work measurement technique breaks down tasks into a series of generic micromotions?

GuDViN [60]

The measurement technique breaks down tasks into a series of generic micromotions is predetermined data approach.

Given that the technique breaks down into a series of generic micromotions.

We are required to name the work measurement technique that breaks down tasks into a series of generic micromotions.

The name of the work measurement technique that breaks down tasks into a series of generic micromotions is predetermined data approach.

The predetermined data method basically eliminates the need for time studies altogether. The analyst has to divide each work element into a series of micromotions common to a variety of tasks.

Hence the measurement technique breaks down tasks into a series of generic micromotions is predetermined data approach.

Learn more about measurement technique at brainly.com/question/4905850

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5 0

2 years ago

Budgeting material purchases budget. The Howell Company has prepared a sales budget of 42,000 finished units for a 3- month peri

tangare [24]

Answer:

The number of Gallon materials Howell company should buy is 166000 Gallons

Explanation:

Finished goods

opening inventory 11000

produced

closing inventory 13000

finished goods sold 42000

using the bottom up approach to get goods produced

sold goods + closing goods - opening goods = produced =44000 goods

Direct material ( Gallons)

opening materials 66000

purchased 166000

available for use 232000

used in production 176000

closing gallons 56000

We use the bottom up approach to get the materials to be purchased

closing stock plus used in production to get available for use then subtract opening material to get purchased = 166000

4 0

3 years ago

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

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