Answer:
Nominal rate of return= 10.96%
Explanation:
Inflation is the increase in the price level.It erodes the value of money.rise in the price of money
<em>Nominal interest is that quoted for investment or loan transactions. It has not been been adjusted for inflation. </em>
<em>Real interest rate is the amount of interest in terms of the the quantity of good and services that can be purchased. It is the nominal interest rate adjusted for inflation.
</em>
The relationship between inflation, real interest and nominal interest rate is given using the Fishers Effect;
N = ( (1+R) × (1+F)) - 1
N- nominal rate, R-real rate, F- inflation
Nominal rate of return =(1.038)× (1.069) - 1 = 0.109622
Nominal rate of return = 0.109622
× 100 = 10.96%
Nominal rate of return= 10.96%
Answer:
Letter a is correct. Distort incentives and this distortion causes markets to allocate resources inefficiently.
Explanation:
What happens is that when rates rise, it causes an imbalance in supply and demand, because at higher rates companies are forced to raise prices to offset tax costs, so the pass-through of consumer prices discourages consumption and as a consequence of less consumption, production also decreases, causing the inefficient allocation of market resources.
Answer:
I prepared an amortization schedule using an excel spreadsheet. The original monthly payment was $836.44. After the 120th payment, the remaining principal balance was $68,940.64. Since she didn't pay anything for 1 year, the new principal balance will be $68,940.64 x (1 + 8%) = $74,455.89
I prepared another amortization schedule for the remaining 9 years, and the monthly payment is $969.32. She will pay off the loan in 108 months.
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Answer:
a.$30,000
b.The alternative i could suggest to Shawn is that he may sell the factory building instead of him to purchase the apartment building in order for him to recognize the loss which will inturn lower his taxes.
Explanation:
a. Calculation of what is Shawn’s realized gain or loss and the basis of the apartment building
Since Shawn tend to received the apartment building which has a Fair Market Value of $320,000 in exchange of his $350,000 worth of factory , this means he had a lost of $30,000 which is calculated as ($320,000-$350,000) which can therefore be deferred
b. The alternative i could suggest to Shawn is that he may sell the factory building instead of him to purchase the apartment building in order for him to recognize the loss which will inturn lower his taxes.
Answer and Explanation:
The Journal entries are shown below:-
Interest expense Dr, $316,800
Premium on bonds payable Dr, $19,200 ($96,000 ÷ 5)
To Interest payable $336,000 ($4,800,000 × 7%)
(Being interest expense and bond premium amortization is recorded)
Here we debited the interest expenses and premium on bonds as it increased the expenses and we credited the interest payable as it also increased the liabilities
