Answer:
it should call back the bonds as it will save $8.25
Explanation:
Bond Price can be calculated using PV function. After 3 years,
N = 2, PMT = 5% x 1000 = 50, FV = 1000, I/Y = 2%
=> Compute PV = $1,058.25
Without the call option, the bond would be worth $1,058.25. But the firm can buy those bonds at $1,050.
Hence, it should call back the bonds as it will save $8.25
Answer:
$582,100
Explanation:
Cost of land $570,000
Less;Salvage parts sold ($23,000)
Demolition of old building $33,000
Land preparation and leveling $2,100
Total cost of land $582,100
The ground breaking ceremony expenses are not capital expenditures therefore ignored in above working.
Answer:
$4,424
Explanation:
Calculation for her employer's after-tax cost of providing the health insurance
Using this formula
After-tax cost =Annually employer's cost of health insurance -(=Annually employer's cost of health insurance*Marginal tax rate)
Let plug in the formula
After-tax cost =$5,600- ($5,600 × 21%)
After-tax cost =$5,600- $1,176
After-tax cost =$4,424
Therefore her employer's after-tax cost of providing the health insurance is $4,424
Answer:
A. nominal interest rate is equal to the expected inflation rate plus the equilibrium real interest rate.
Explanation:
Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.
Generally, inflation usually causes the value of money to fall and as a result, it imposes more cost on an economy.
When this persistent rise in the price of goods and services in an economy becomes rapid, excessive, unbearable and out of control over a period of time, it is generally referred to as hyperinflation.
The Fisher effect states that the nominal interest rate is equal to the expected inflation rate plus the equilibrium real interest rate.
Thus, the real interest rate in a particular country's economy equals the nominal interest rate minus the expected inflation rate.
All things being equal (Ceteris paribus), the expected inflation rate of a country's economy would eventually cause an equal rise in the interest rate that the deposits of the country's currency can offer. Also, as inflation increases, the real interest rate falls or decreases.
