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4 years ago

In your own words, explain the difference between the nominal interest rate and real interest rate.

Business

1 answer:

puteri [66]4 years ago

5 0

Answer:

The nominal interest rate is the quoted interest rate, while the real interest rate is defined as the nominal interest rate minus the expected rate of inflation.

Another common definition is that a 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. A nominal interest rate refers to the interest rate before taking inflation into account. The real interest rate is approximately equal to the nominal interest rate minus the expected rate of inflation.

(please put in own words)

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Because of the free-rider problem,

Nookie1986 [14]

Answer:

c. private markets tend to undersupply public goods

Explanation:

Because of the free-rider problem, private markets tend to undersupply public goods

6 0

3 years ago

Holthausen Corporation issued $400,000 of 11%, 20-year bonds at 108 on January 1, 2013. Interest is payable semiannually on June

lora16 [44]

Answer:

Journal Entries

Explanation:

The journal entries are as follows

1. Cash $432,000

To Bonds payable $400,000

To Premium on bond payable $32,000

(Being the issuance of the bond is recorded)

The premium on bond payable is computed below:

= $400,000 ÷ $100 × $8

= $32,000

The $8 comes from $108 - $100

2. Bond payable $400,000

Premium on bond payable $27,809

To Cash $412,000 ($400,000 × 103%)

To Gain on bond redemption $15,809 ($432,000 - $4,191 - $412,000)

(Being the retirement of the bond is recorded)

3 0

4 years ago

Assume that an industrial building can be purchased for $1,500,000 today, is expected to yield cash flows of $80,000 for each of

Luden [163]

Answer:

6.79%

Explanation:

The IRR is the discount rate that equates the cost of a project to its after tax cash flows.

The IRR can be calculated using a financial calculator:

Cash flow for year 0 = -$1,500,000

Cash flow for year 1 to 4 = $80,000

Cash flow for year 5 = $1,625,000 + $80,000 = $1,705,000

IRR = 6 79%

I hope my answer helps you

6 0

3 years ago

Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common sto

ANTONII [103]

Answer:

16.30%

Explanation:

Calculation for what the percentage of the company's capital structure consists of debt

Using this formula

rs=D1/P0+g

First step is to find the D1 using this formula

D1=(1+Dividend expected grow constant rate) *+Dividend per share

Let plug in the formula

D1=(1+0.07)*$2.00

D1=1.07*$2.00

D1=$2.14

Now let find the percentage of the company's capital structure Using this formula

rs=D1/P0+g

Let plug in the formula

rs=$2.14/$23.00+0.07

rs=0.09304947+0.07

rs=0.1630*100

rs=16.30%

Therefore the percentage of the company's capital structure consists of debt will be 16.30%

5 0

3 years ago

Which set of terms correctly completes this statement?

galina1969 [7]

Answer:

Explanation:

when you go to the doctor, you pay copay

3 0

3 years ago