Residential Investment Payments of Factor Income to the rest of the world National Income Inventory Adjustment 0.00 Personal Con
sumption Expenditure Depreciation Exports Nonresidential Investment Receipts of Factor Income from the Rest of the World Government Transfer Payment 200.00 Statistical Discrepancy 0.00 Imports Using the above information calculate the values of GDP, GNP, NNP and Government Consumption and Gross Investment (G).
1 answer:
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Answer and Explanation:
Gross domestic product is calculated:
Gross Domestic Product(GDP) = Gross National Product (GNP) - Receipts of factor income from rest of the world + Payments of factor income to the rest of the world
So to find GDP, we calculate GNP
GNP = NNP+Depreciation
To calculate GNP, we calculate NNP:
Net national product (NNP) =national income, so we have,
NNP = $2,445 billion
GNP = NNP + Depreciation = $2,445+$75
GNP = $2,520 billion
So we substitute in GDP formula to calculate GDP
GDP = 2,520 - 70 + 50 = $2500 billion
GDP = $2,500 billion
Government consumption and gross investment= Government transfer payments + Non-residential investments
Government consumption and gross investment is given by G
G = 200+250 = $450 billion
G = $450 billion
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Answer:
a.
Bond Price = $563,333.90007 rounded off to $563,333.90
b.
Bond Price = $502500
c.
Bond Price = $437232.16025 rounded off to $437232.16
Explanation:
To calculate the quote/price of the bond today, which is the present value of the bond, we will use the formula for the price of the bond. As the bond is a semi annual bond, we will use the semi annual coupon payment, semi annual number of periods and semi annual YTM. The formula to calculate the price of the bonds today is attached.
a. Case A: Market interest rate (annual): 4 percent
Coupon Payment (C) = 502500 * 0.06 * 6/12 = $15075
Total periods remaining (n) = 7 * 2 = 14
r or YTM = 4% * 6/12 = 0.02 or 2%
Bond Price = 15075 * [( 1 - (1+0.02)^-14) / 0.02] + 502500 / (1+0.02)^14
Bond Price = $563,333.90007 rounded off to $563,333.90
b. Case B: Market interest rate (annual): 6 percent
Coupon Payment (C) = 502500 * 0.06 * 6/12 = $15075
Total periods remaining (n) = 7 * 2 = 14
r or YTM = 6% * 6/12 = 0.03 or 3%
Bond Price = 15075 * [( 1 - (1+0.03)^-14) / 0.03] + 502500 / (1+0.03)^14
Bond Price = $502500
c. Case C: Market interest rate (annual): 8.5 percent.
Coupon Payment (C) = 502500 * 0.06 * 6/12 = $15075
Total periods remaining (n) = 7 * 2 = 14
r or YTM = 8.5% * 6/12 = 0.0425 or 4.25%
Bond Price = 15075 * [( 1 - (1+0.0425)^-14) / 0.0425] + 502500/(1+0.0425)^14
Bond Price = $437232.16025 rounded off to $437232.16
