Answer:
V = 3.5 (1 dollar circulates 3.5 times in a year)
In short term – Reduction of aggregate demand and real output
In long term – reduction of wages and increase of real output of firms
Nominal GDP will fall by $20 bilion
Explanation:
Equation of monetisation =
Total money in circulation = Total money demanded/total output
Money Supply * Money Velocity = Price Level * GDP
V = PY/M
Substituting the given values, we get –
V = 336/96
V = 3.5
This indicates 1 dollar circulates 3.5 times in a year
In short term – Reduction of aggregate demand and real output
In long term – reduction of wages and increase of real output of firms
Nominal GDP will fall by $20 bilion
Answer:
Leasing.
Explanation:
Find the present value of each and compare and choose the one with the lowest cost in present value terms.
<u>LEASE;</u>
Payments are in form of an annuity ;done using financial calculator (TI BA II plus)
PMT = -30,000
N ;duration = 4
I/Y = 10%
FV = 0
then CPT PV = -$95,095.96
<u>BUY</u>
Initial cost; (already in present value terms) = -$80,000
Annual maintenance(is an annuity); done using financial calculator (TI BA II plus)
PMT = -10,000
N ;duration = 4
I/Y = 10%
FV = 0
then CPT PV = -$31,698.65
Add PV of salvage value;
PV = FV/ (1+r)^4
PV = 20,000 /(1.10^4)
= 20,000/ 1.4641
= $13,660.26911
Overall PV of BUYING = (-80,000 -31,698.65 + 13,660.26911) = -$98,038.38
Therefore, leasing is a better option since the overall present value of costs is lower at $95,095.96 compared to that of buying at 98,038.38.
Since the questions are different, the answers are separated for question 1 and 2
ANSWER:
1) The best question to ask is: "What are the top three sights I should see".
2) Avoid assuming unethical behavior until you clarify what he is asking for in relation to the agreed-upon contract.
Inform the executive that this extra $10,000 wasn't in the original contract.
EXPLANATION:
1) It I very important to know the things expected to happen in the meeting, so that you can prepare ahead for it. Knowing the top three sights will help you prepare ahead for them. This question tends to extract the frequent and most occuring actions the supervisor always encounter during her meetings at Thailand.
2) It is not always right for us to condemn people's actions without the details of such action. Try to understand the details of why the executive wants you to add $10,000 to the cost of the project, so that you won't assume wrongly. And it is always right to specify the $10,000 demanded by the executive as a separate cost from the initial cost of the project, if the money does not directly linked the the initial cost of the project.
Answer:
I strongly believe that the requirement is to calculate the price of the bond.
The bond is worth $ 70,824,063.03
Explanation:
It is noteworthy that a rational would-be investor would pay for a bond a price that reflects the cash flows receivable from the bonds in future discounted to today's terms.
The future cash flows comprise of the semi-annual coupon interest of $4 million(10%/2 *$80 million) for 20 periods as well as the repayment of the principal $80 million at the end of period 20
Since coupon is paid every six months, the coupon would be twenty times over the life of the bond(paid twice a year for 10 years)
To bring the cash inflows today's term, we multiply them them by the discounting factor 1/(1+r)^N , where is the yield to maturity of 12% and N is the relevant the cash flow is received.
The discounting is done in attached spreadsheet leading $ 70,824,063.03 present value today.
