Answer: By the end of the year I would be worst off
Explanation: This is because my savings would shrink ,although an interest is paid on the fixed account, the interest is not increasing at the rate at which the inflation is growing.
At any time savings don’t increase at the same rate as inflation, the owner of the fixed savings account will effectively lose money.
This is because with an increase in inflation comes a reduction in the buying power of an individual.
Answer:
Investment income of $46,000 in its income statement
Explanation:
Calculation for the amount that Smith will report in the 2018 financial statements,
Investment income =Fair value of $594,000-Purchased $548,000
Investment income =$46,000
Therefore Smith will report investment income of $46000 in its 2018 financial statements,
Answer:
$55,000
Explanation:
Data provided in the question:
Income in 2016 = $50,000
Nominal income in 2017 = $70,000
CPI in 2016 = 100
CPI in 2017 = 110
Now,
Purchasing power in 2017 = [ CPI of 2017 ÷ CPI of 2016 ] × Income in 2016
or
Purchasing power = [ 110 ÷ 100 ] × $50,000
or
Purchasing power = 1.1 × $50,000
or
Purchasing power = $55,000
