All categories

3 years ago

The true cost of borrowing and lending is best measured by

1 answer:

7 0

<span>The true cost of borrowing and lending is best measured by the real interest rate. Real interest rate adjusts the nominal interest rate by inflation. (Real interest=Nominal interest-Inflation)

Let us consider two instances:
Instance 1 : Nominal interest rate is 5% and CPI inflation at 2.8%.
Instance 2 : Nominal interest rate stays at 5% and CPI inflation at 3.5%.

During Instance 2, for an unassuming lender, though it looks like he is not impacted, inflation has taken away some of his purchase power while the interest he earns is the same. Likewise a low inflation rate will have a hidden impact for the borrower and beneficial for the lender.

Instead, if we take real interest into account, first instance had a real interest rate of 2.2% and the second instance had a real interest rate of 1.5% which explicitly shows the impact of the higher inflation rate and thus reflects the true cost of borrowing/lending.</span>

You might be interested in

Do you think percentage gains

Anni [7]

I think more varied if you added additional mutual funds you would have a more diverse portfolio.

8 0

3 years ago

Read 2 more answers

Solomon Ski Company manufactures snow skis. During the most recent accounting period, the company’s finishing department transfe

LiRa [457]

The various costs for Solomon Ski Company during the recent accounting period are determined as follows:

1. Cost per equivalent unit is <u>$65.</u>

2. Cost of finished goods transferred out from the finishing department is <u>$269,750</u>.

3. Cost of the ending WIP inventory is <u>$15,600</u>.

<h3>What is the cost per equivalent unit?</h3>

The cost per equivalent unit refers to the average cost per unit based on the total production costs divided by the total equivalent units of production.

The equivalent units of production depend on the degree or percentage of completion for the various cost classes.

<h3>Data and Calculations:</h3>

Transfer to finished goods = 4,150

Ending inventory = 480

Degree of completion of the ending inventory = 50%

Total equivalent units = 4,390 (4,150 + 480 x 50%)

Total production costs = $285,350

Cost per equivalent unit = $65 ($285,350/4,390)

Cost of finished goods = $269,750 ($65 x 4,150)

Cost of the ending WIP = $15,600 ($65 x 240)

Thus, equivalent units refer to the degree of work completed per unit.

Learn more about equivalent units of production at brainly.com/question/16259709

#SPJ1

7 0

1 year ago

Investment interest expense includes:

Oksana_A [137]

Answer:

A)) interest expense from loans to purchase corporate bonds and interest expense from loans to purchase stocks.

Explanation:

An investment interest expense can be regarded as any amount of interest which is been paid on proceeds of loan that is been used in purchasing investments or securities. investment interest expense can be regarded as been deductible under some particular circumstances.

It should be noted that investment interest expense include;

✓interest expense from loans to purchase corporate bonds

✓ interest expense from loans to purchase stocks.

8 0

3 years ago

Benefits of corporate wikis include enhancing the reputation of expert contributors, making work flow more easily, and ________.

Mama L [17]

Answer: Improving an organization processes

Explanation:

According to the given question, the benefits of the corporate wikis is that improving an organization process, enhancing the expert contributors and also makes the work flow more easy.

By improving an organization process we analyze all the processes in the business and also optimize the quality.

The organization processes is basically used in an organization for the planning purpose and we can also accomplished the goals for the decision making framework.

Therefore, Improving an organization processes is the correct answer.

8 0

3 years ago

At january 31, 2015, the balance in aislers inc.’s supplies account was $750. during february, aislers purchased supplies of $90

netineya [11]

Beginning balance 750
Add supplies purchase 900
Less supplies used 1125

Supplies on hand at the end of february is
750+900−1,125=525...answer

Hope it helps!

3 0

3 years ago