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lozanna [386]
3 years ago
11

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflat

ion rate was 7%, what was the real interest rate you paid?
Business
1 answer:
brilliants [131]3 years ago
7 0

Answer:

3%

Explanation:

Data provided as per the question

Nominal interest rate = 100%

Inflation rate = 7%

The computation of the real interest rate is shown below:-

Real interest rate = Nominal interest rate - Inflation rate

= 10% - 7%

= 3%

Therefore, for computing the real interest rate we simply deduct the inflation rate from the nominal interest rate.

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Which monarch prepares a speech which is broadcasted on Christmas Day?
Galina-37 [17]
Hey stop think go smoke easy up on the pain the smoke a calm u down I'k it's hard but I take them points now thanks
6 0
3 years ago
You want to invest in a project in LaLaLand. The project has an initial cost of LLL 757,000 and is expected to produce cash infl
Lelu [443]

Answer:

194,112.8

Explanation:

The computation of  Net Present Value is shown below:-

Net Present Value = Present value of cash inflows - Present value of Cash outflows

= -757,000 + 396,000 × PVAF (12%, 3 years)

= -757,000 + 396,000 × 2.4018

= -757,000 + 951,112.8

= LLC 194,112.8

= 194,112.8

Therefore for computing the net present value we simply applied the above formula.

8 0
2 years ago
You are comparing three investments, all of which pay $100 a month and have an interest rate of 8 percent. One is ordinary annui
Ivan

Answer:

c. The present value of the perpetuity has to be higher than the present value of either the ordinary annuity or the annuity due

Explanation:

Considering the following statements:

  • the ordinary perpetuity, the payments must occur on the first day of each monthly period. Hence this statement is incorrect.
  • The ordinary annuity would be more valuable than the annuity due if both had a life of 10 years. Incorrect.
  • In case of perpetuity the times is not limited, hence would get the higher return.
6 0
3 years ago
Deflation is generally considered by economists to be a positive economic situation because it creates strong job growth.
Drupady [299]

Answer:

The correct answer is False.

Explanation:

The disadvantages of deflation are basically the reduction of economic activity, the increase in unemployment, the increase in economic uncertainty, the increase in real interest rates due to falling prices, falling demand.

The danger of this situation comes from how difficult it is to get out of it, since a vicious circle is created by which when demand falls, companies are reduced their profits by having to reduce prices to get sales, as a result , they have to reduce costs, which means they have to cut jobs. In turn, if there are people who run out of work, demand will continue to decrease as they will stop buying as well.

3 0
2 years ago
In the government sector, there is a. nothing comparable to profit and loss that will weed out inefficient activities. b. nothin
Marta_Voda [28]

Answer:

Option D is correct.

All of the above.

Explanation:

In the government sector, there is:

a. nothing comparable to profit and loss that will weed out inefficient activities.

b. nothing comparable to bankruptcy that will bring inefficient programs to a halt.

c. a strong incentive for managers of government agencies and enterprises to expand the size of their government funding.

8 0
3 years ago
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