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grandymaker [24]
3 years ago
5

Suppose the inflation premium is 2 percent and the nominal interest rate is 1 percent. Instructions: In part a, enter your answe

r as a whole number. In part b, round your answer to 1 decimal place. If you are entering any negative numbers be sure to include a negative sign () in front of those numbers a. What is the real interest rate? b. What if the inflation premium is 3 percent while the nominal interest rate is 0.5 percent?
Business
1 answer:
Fudgin [204]3 years ago
8 0

Answer:

(a) Real Interest Rate   = -1 %

(b) Real Interest Rate   = -2.4 %

Explanation:

Real Interest Rate = (1+ Nominal Interest rate)/(1+Inflation Rate) -1

 (a)Real Interest Rate = (1+0.01)/(1+0.02)-1

                                    = -1 %

 (b) Real Interest Rate = (1+0.005)/(1+0.03) -1

                                      = -2.4 %

Real Interest Rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor.

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Do some independent research on Nicholas Carr (the author of "IT Doesn’t Matter") and explain his current position on the abilit
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I agree with Carr's position.

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7 0
3 years ago
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 1.25 percent per year,
lana66690 [7]

Answer:

$793.70

Explanation:

The computation is shown below:

At introductory rate

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And, in monthly, the rate would be

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= 1.4833%

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Amount after 6 month would be

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= $8,050.14 × (1 + 1.4833%)^6

= $8,793.70

The interest after 6 month is

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= $743.55

So, the total interest would be

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= $793.70

5 0
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