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Nata [24]
3 years ago
15

Due to a recession, expected inflation this year is only 4.25%. However, the inflation rate in Year 2 and thereafter is expected

to be constant at some level above 4.25%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 0.5%, what inflation rate is expected after Year 1
Business
1 answer:
kirill115 [55]3 years ago
8 0

Answer:

The inflation rate expected after Year 1 is 5%

Explanation:

In order to calculate the inflation rate expected after Year 1 we would have to make the following calculations:

Yield on 1 year treasury bond r1=r+inflation rate=3.5%+4.25%=7.75%

r3=r1+0.5%=7.75%+0.5%=8.25%

But r3=r+IP3

Therefore, 8.25%=3.5%+IP3

IP3=4.75%

So, inflation rate expected after Year 1=(4.25%+I+I)/3=4.75%

(4.25%+I+I)=14.25%

2(I)=10%

I=5%

The inflation rate expected after Year 1 is 5%

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Kirkwood acquires 100 percent of the outstanding voting shares of Soufflot Company on January 1, 2018. To obtain these shares, K
lesya [120]

Answer:

$555,000

Explanation:

Calculation for the amount that will be reported for consolidated cash after the acquisition is completed

Cash at Kirkwood Inc $475,000

(900-400-15-10)

Add Cash at Soufflot Company $80,000

Consolidated cash after acquisition is completed $555,000

Therefore the amount that will be reported for consolidated cash after the acquisition is completed will be $555,000

4 0
3 years ago
In 1974, the price level for Pacifica was 100, the price level for Atlantica was also 100, and in the foreign exchange market 1
blsea [12.9K]

Answer: 0.78 pound mark exchange rate

Explanation:

The Purchasing power parity (PPP) is typically used to make comparison between the currencies of different countries' currencies and also used in comparing their standards of living.

According to PPP, the pound-mark exchange rate in 2003 will be calculated as:

= 280/360

= 0.78

6 0
3 years ago
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years,
Nataly_w [17]

Answer:

The annuity will cost him $963,212.95.-

Explanation:

Giving the following information:

Cash flow= $75,000

Interest rate= 0.0525

n= 20

First, we need to calculate the final value. We will use the following formula:

FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

A= annual cash flow

FV= {75,000*[(1.0525^20) - 1]/0.0525} + {[75,000*(1.0525^20)] - 75,000}

FV= 2,546,491.88 + 133,690.82= $2,680,182.70

Now, the present value:

PV= FV/(1+i)^n

PV= 2,680,182.70/(1.0525^20)

PV= $963,212.95

4 0
4 years ago
What is the nature of the industry being operated at koppers?
Leviafan [203]
<span>Up until 2009 a wood treating facility was operated at Koppers
The wood treating facility lasted for more than 90 years (it operated from </span>1916  to 2009). 
The operation is forced to close after government found unsafe carbon footprints from the substance that used for Koppers' operation.<span />
8 0
4 years ago
If your procurement budget request did not provide for buying a whole number of useable end items, this would be a violation of
Valentin [98]

Answer:

Full funding policy.

Explanation:

This would be a violation of Full funding policy.

Full funding strategy is a federal budgeting requirement implemented by Congress in the 1950s on the Department of Defense (DOD) that mandates all acquisition expenses of a weapons or piece of military equipment to be financed in the year the object is procured. Hence in the above example there is violation of Full funding strategy.

3 0
3 years ago
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