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katen-ka-za [31]
3 years ago
12

Suppose that the consumer price index in Eastlandia rises from 150 to 159 over the past year, and that the city sets its car reg

istration prices so that real prices stay the same. If the cost to register a car was $50 last year, how much would it cost this year, in nominal terms?
Business
1 answer:
Mnenie [13.5K]3 years ago
4 0

Answer:

The Nominal Cost to register the car should be $53.

Explanation:

For the first year the data is given as

CPI=150

Nominal Price=$50

Real Income= Nominal Cost / Consumer Price Index

                    =50/150 = 0.33

Now for the second year as the real income is same as previous year thus

RI=0.33

CPI has increase to 159. Now the nominal cost is given as

Nominal Cost=Real Income * Consumer Price Index

Nominal Cost=0.33 * 159

Nominal Cost=$53

So the Nominal Cost to register the car should be $53.

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Answer:

PV= $12,111.93 = $12,112

Explanation:

Giving the following information:

Future Value (FV)= $150,000

Interest rate (i)= 8.75% = 0.0875

Number of periods (n)= 30

<u>To calculate the present value (PV), we need to use the following formula:</u>

PV= FV/(1+i)^n

PV= 150,000 / (1.0875^30)

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Sally Fuller is a buyer for GWA publishing company. Her job is to purchase supplies and services for the printing of technical m
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