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Yuliya22 [10]
2 years ago
15

A bond that pays interest annually yielded 7.37 percent last year. The inflation rate for the same period was 2.4 percent. What

was the actual real rate of return?
Business
1 answer:
bazaltina [42]2 years ago
5 0

Answer:

Real interest rate= 0.0497= 4.97%

Explanation:

Giving the following information:

A bond that pays interest annually yielded 7.37 percent last year. The inflation rate for the same period was 2.4 percent.

<u>The effect of the inflation rate is counterproductive to the interest rate. It diminishes purchasing power.</u>

Real interest rate= nominal interest rate - inflation rate

Real interest rate= 0.0737 - 0.024

Real interest rate= 0.0497= 4.97%

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8 0
3 years ago
Mercier Corporation's stock is selling for $95. It has just paid a dividend of $5 a share. The expected growth rate in dividends
Anni [7]

Answer:

r = 13.68%

Explanation:

We can use Gordon growth model to calculate the stock price.

P = Do x (1+g) / r - g

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g: Dividend growth rate (8%)

r: required return (Missing value)

By inputting the number into the above equation, we have the following:

95 = 5 x 1.08 / (r - 0.08)

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4 0
3 years ago
At the beginning of the year, Bryers Incorporated reports inventory of $6,200. During the year, the company purchases additional
Nana76 [90]

Answer:

Cost of Goods Sold = $19200

Explanation:

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8 0
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