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3 years ago

Answer the following questions about the (real) inflation tax, assuming that the price level starts at 100.

Business

1 answer:

Rus_ich [418]3 years ago

7 0

Answer:

a) $900 after 1 year

b) $810 after 2 years

Explanation:

This deals with the time value of money concept. This states that money is worth more today than the same amount is worth sometime in the future. The real purchasing power is the nominal purchasing power discounted back as per the prevailing inflation rate.

For a)

$1000 after one year will be worth 1000 * 0.9 = $900 or a reduction of $100 as 1000 today is worth only 900 after 1 year.

For b)

The inflation rate discounts real purchasing power year over year so after 2 years the real purchasing power will be as follows,

Real purchasing power = 900 * 0.90 = $810 which is discounted by 10% inflation for 2 years.

Hope that helps.

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A 10-year (zero-coupon) Treasury bill with face value of $100 per share is selling at $70.89 per share. There is a 10-year corpo

olga55 [171]

Answer:

3.5%

Explanation:

the yield to maturity of a zero coupon bond is calculated using the following formula:

YTM = (face value / current market value)¹/ⁿ - 1

YTM = ($100 / $70.89) ¹/¹⁰ - 1 = 3.5%

the way you can check if your calculations were correct is to find the future value of the bond using the YTM = $70.89 x (1 + 3.5)¹⁰ = $99.997 ≈ $100

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3 years ago

What are the 3 main factors that affect the labor market

Fynjy0 [20]

Economy- Macroeconomic conditions affect labor supply and demand. Job losses during a recession mean less disposable income for consumers and less demand for cars.
Globalization-Globalization involves the import of foreign automobiles and relocation of manufacturing facilities overseas. This has led to a steady decline in U.S. automobile-sector employment.
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3 years ago

Harry, Hermione, and Ron formed an S corporation called Bumblebore. Harry and Hermione both contributed cash of $29,400 to get t

Anna007 [38]

Answer:

$29,400; $29,400 and $18,400

Explanation:

Value of parcel of land = $69,800 with a basis = $58,800

Harry's basis is equal to cash contributed which is $29,400

Hermione's basis is equal to cash contributed which is $29,400

Ron's basis = Basis of parcel of land - Mortgage value

= $58,800 - $40,400

= $18,400

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3 years ago

What will be the depreciation, via the straight line method, if the cost of a plant is $43,250, estimated disposal value is $3,2

Alinara [238K]

Answer:

depreciation expense per year 8,000

Explanation:

The first step, is to calculate the depreciable amount for the asset:

cost - salvage value = amount subject to depreciation

43,250 - 3,250 = 40,000 = depreciable amount

Then, we calculate the depreciation per year:

depreciable amount/ useful life = depreciation per year

40,000/5 = 8,000

In some particular cases, the first year the asset enter the accounting it could be for a period of half the accounting period, so only half-year depreciation is appliedon the first year.

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3 years ago

San Ruiz Interiors provides design services to residential and commercial clients. The residential services produce a contributi

Sliva [168]

Answer:

If closed the operating income will decrease by 50,000

Is a better scenario to continue with the residential sercives

Explanation:

current scenario:

contribution margin 450,000

Fixed Cost 480,000

net loss 30,000

drop scenario:

contribution margin = 0

fixed cost 450,000-370,000 = 80,000

net loss (80,000)

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3 years ago