Answer:
Gringotts Bank real interest rate = 20% - 25% = -5%
Explanation:
real interest rate = nominal interest rate - inflation rate
the inflation rate between year 1 and year 2 = [(CPI year 2 - CPI year 1) / CPI year 1] x 100 = [(150 - 120) / 120] x 100 = (30 / 120) x 100 = 0.25 x 100 = 25%
Gringotts Bank real interest rate = 20% - 25% = -5%
since the interest rate is negative, that means that Gringott Bank is actually losing money by lending it at 20% since the inflation rate is much higher.
Answer:
It will incur an Opportunity cost of $8,000.
Explanation:
It will incur the opportunity cost of $8000 because the additional unit produces by the company then the additional revenue that is generated will be equal to the amount (25 - 20) x 12,000 = 60,000. Since the additional cost, that incurs for the production of 12000 units is 52000. Therefore the profit earned is $8000.
So if the company does not produce it then it will lose the profit of $8000.
Answer:
You should accept the original payment method because it is cheaper. Interests resulting from the original method are 5,824, while the interests charged using the alternative method are 7,000.
Explanation:
alternative 1:
total principal of the loan = 35,000
yearly interest = 2% x 4 = 8%
future value of loan + interests in two years = 35,000 x (1 + 8%)² = 40,824
total interest = 5,824
alternative 2:
total principal of the loan = 35,000
yearly interest = 10% x 2 = 20%
future value of loan + interests in one years = 35,000 x (1 + 20%) = $42,000
total interest = 7,000
Answer:
Bond
Explanation:
It would be like a loan given to a place, government, company, etc. that pays the people (investors) pay a rate of return over a specific timeframe.