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Mazyrski [523]
4 years ago
15

Assume you borrowed $100,000 at a fixed rate of 7 percent for 30 years to purchase a house. If the inflation rate is 3 percent,

then your repayments to the lender have ___________ purchasing power than the dollars that s/he loaned to you.
A) less
B) more
C) the same
D) none of the above
Business
1 answer:
worty [1.4K]4 years ago
6 0

Answer:

The correct answer is option B.

Explanation:

The rate of interest is given at 7%.

The rate of inflation is given at 3%.

This implies that the purchasing power is decreasing by 3% due to inflation. But it is also rising by 7% due to interest rate.

Since the increase in purchasing power is greater than decrease. After repayment the lender will have more purchasing power than he/she loaned out.

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Brooks Co. purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purc
Thepotemich [5.8K]

Answer:

                                                  Dr.               Cr.

December 31

*Securities FV adjustment      $6,000

Unrealized Gain                                       $6,000

January 3

Cash                                         $4,000

Securities FV adjustment                        $1,000

Trading Securities                                    $3,000

* Securities FV adjustment is a sub asset account of trading securities.

Explanation:

Trading security are reported on its fair market value at each period end. The gain or loss should be recorded.

Dec 27, Purchase price = $66,000

Dec 31, Fair value = $72,000

Unrealized gain = $72,000 - $66,000 = $6,000

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8 0
3 years ago
Hardmon Enterprises is currently anâ all-equity firm with an expected return of 15.2%. It is considering a leveraged recapitaliz
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Answer and Explanation:

The computation is shown below:

a. The expected return of equity is

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= 15.2% + 0.5 × (0.152 - 0.05)

= 20.3%

b. Now the debt cost of capital is 7%

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= Expected return + debt to equity ratio × (expected return - debt cost to capital)

= 15.2% + 0.5 × (0.152 - 0.07)

= 27.5%

c. As we know that if the investment has a higher return than of course it has high risk also or we can say it is compensated by high risk

So it would be best shareholder interest

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3 years ago
the sources of family income can be classified as to regular income which includes________and irregular income such as________?​
xz_007 [3.2K]

Answer:

Explanation:

the sources of family income can be classified as to regular income which includes________and irregular income such as________?​

8 0
3 years ago
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