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Scilla [17]
3 years ago
13

Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.

00 years?
Business
1 answer:
OverLord2011 [107]3 years ago
6 0

Answer:

Present Value= $15,874.25

Explanation:

Giving the following information:

Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.00 years?

<u>This is a rare case where the interest rate is negative:</u>

Interest rate= 0.03 - 0.06= -0.03

Having said this, the present value is higher than the final value:

PV= FV/ (1+i)^n

PV= 14,488/ 0.97^3= $15,874.25

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Dée Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $36 per share. She borrows $4,500 from her b
meriva

Answer:

A) Dee´s Margin = 58.33%; B) Remaining Margin if price drops to $26 is 30.56% C) She won´t receive a margin call (but close...)

D) Rate of Return = - 32.36%

Explanation:

Hi, first let´s find out what the initial margin is, for that we have to use the following formula.

Margin=\frac{Equity}{ValueStocks}

Now, in order to find the equity, we have to find the total value of the stocks and substract the debt from it, since it was 300 shares at $30 per share, the total value of the investment is $7,800, therefore, its equity is $3,300 ($7,800-$4,500).

So everything should look like this

Margin=\frac{6,300}{10,800} =0.5833

So the initial margin was 58.33%

If the price drops to $26 by the end of the year, the remaining margin in her account is:

Margin=\frac{3,300}{10,800} =0.3056

So the remaining margin one year later, after the stock price dropped to $26 was 30.56%

Now, in order to find the rate of return on her investment, at the end of the year, we have to remember that the money loaned was at 11%, therefore, the best way to find out the return of this investment is to convert this into money, like such.

First (Gross Return of the stock)

Gross Return=\frac{Final.P-Initial.P}{Initial.P} x100

Gross Return=\frac{26-36}{36} x100=-0.2778

Ok, we have the gross return, which is -$27.78%

The interest expenses are just as follows.

Interest Expense=4,500*0.11=-495

To find the return on the investmen, we need to use the following formula.

RateReturn=\frac{FinalInvestment-InitialInvestment}{InitialInvesment} x100

The final investment is: Gross return($)+interest Expenses

FinalInvest=\frac{300*(-10)+(-4,500*0.11)}{10,800} =-0.3236

This means that, by the end of the year, her return on the investment was -32.36%. In money, this is - $3,495.

Best of luck.

5 0
3 years ago
International flows of funds can affect the Fed's monetary policy. For example, suppose that interest rates are trending lower t
Elden [556K]

Answer:

International flows of funds can affect the Fed's monetary policy. For example, suppose that interest rates are trending lower than the Fed desires. If this downward pressure on U.S. interest rates may be offset by <u>outflows</u> of foreign funds, the Fed may not feel compelled to use a <u>tight </u>monetary policy.

Explanation:

A Tight Monetary Policy is when the central bank tightens policy or makes money tight by raising short-term interest rates through policy changes to the discount rate, also known as the federal funds rate. Boosting interest rates increases the cost of borrowing and effectively reduces its attractiveness.

Outflows of foreign funds or the flight of assets occurs when foreign and domestic investors sell off their holdings in a particular country because of perceived weakness in the nation's economy and the belief that better opportunities exist abroad.

The reasoning is as follows, the rate is down in the USA so holders of assets look for better rates abroad as a consequence  there is less money in the US domestic economy and automatically the rate tend to rise (remember that interest rate is the price of money). If there is less supply of something the price of that something will go up (ceteris paribus). The same thing will happen to the interest rate without the intervention of the FED.

7 0
3 years ago
Rayburn owns all the shares of Newcastle Corporation, which operates as an S corporation. Rayburn's basis in the stock is $15,00
maksim [4K]

Answer:

$7,000 $-0-

Explanation:

For Rayburn to know what to record from the cash distribution, he will need to subtract his basis in the stock from the cash distribution he receives

Therefore $22 000 - $15 000 = $7 000.

And Newcastle has no income =$-0-

7 0
3 years ago
Bernice’s has $823,000 in sales. The profit margin is 4.2 percent and the firm has 7,500 shares of stock outstanding. The market
Irina-Kira [14]

Answer:

a. 3.58

Explanation:

the price earning ratio is obtain with the following formula:

\frac{Market \: Price}{EPS}

We are given with the market price, now we need to solve for the EPS

with sales and profit margin we solve for net income. then we divide by the shares outstanding to get the EPS

823,000 sales x 4.2 profit margin = 34.566‬ net income

now we solve for EPS Earning per share:

\frac{Income}{Shares}\\\frac{34,566}{7,500} = 4.6088‬

Now we can sovle for price-earnings ratio

\frac{Market \: Price}{EPS}

16.50/4.61 = 3,5791 = 3.58

8 0
2 years ago
5. Successive US administrations have accused the Chinese government of manipulating their currency (Yuan) to
k0ka [10]

A weaker Yuan against the US dollar makes Chinese exports cheaper, increases demand, and makes US exports to China more expensive, thereby reducing the demand for US exports.

<h3>What is international trade?</h3>

International trade is the global exchange of goods and services among countries of the world, involving the use of the foreign exchange.

The three types of international trade are:

  • Export Trade
  • Import Trade
  • Entrepot Trade.

Thus, by manipulating the Yuan, the Chinese government ensures that it has a more competitive advantage over the United States in international trade.

Learn more about Chinese Yuan Manipulation at brainly.com/question/27858412

#SPJ1

5 0
1 year ago
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