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fomenos
3 years ago
5

You open a savings account with a 0.5% per year nominal interest rate, and the economy experiences 3% per year inflation. a. Wha

t is the nominal and real annual interest rate on the account? The nominal interest rate is %, and the real interest rate is %. b. What will happen to the purchasing power of the money you place in the account over time? The purchasing power of money in the account will
Business
1 answer:
Firlakuza [10]3 years ago
3 0

Answer:

a. The nominal interest rate is 0.5%, and the real interest rate is -2.5%.

b. The purchasing power of money in the account will reduce.

Explanation:

a. What is the nominal and real annual interest rate on the account? The nominal interest rate is %, and the real interest rate is %.

From the question, we have:

Nominal interest rate = 0.5%

Inflation rate = 3%

In economics, the real is interest rate is calculated as follows:

Real interest rate = Nominal interest rate - Inflation rate = 0.5% - 3% = -2.5%

Therefore, the nominal interest rate is 0.5%, and the real interest rate is -2.5%.

b. What will happen to the purchasing power of the money you place in the account over time? The purchasing power of money in the account will

From the question, the interest rate attached to the savings account is a nominal interest rate. Since the nominal interest rate, unlike the real interest rate, is an interest rate that is not adjusted for inflation, the purchasing power of money in the account will reduce.

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For the current year, Delta Corporation has beginning and ending inventories of $80,000 and $100,000, respectively. Cost of good
PtichkaEL [24]

Answer:

The average days in inventory are 5 days

Explanation:

The average days in inventory is computed or evaluated as:

Average days in inventory = COGS (Cost Of Goods Sold) / Average Inventories

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Average Inventories = Beginning Inventory + Ending Inventory / 2

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Average Inventories = $80,000 + $100,000 / 2

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Now, putting the values above in the formula:

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= 5 days

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3 years ago
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are o
Volgvan

Answer: The correct answers are "The general level of stock prices" and "The effect of the tax rate on the cost of debt in the weighted average cost of capital equation".

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3 years ago
After graduation from college, you will receive a substantial increase in your income from a new job. If you decide that you wil
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Answer:

c. inferior good.

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A single server model with infinite calling population, first-come, first-served queue discipline, Poisson arrival rate and expo
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The computation of the average number of customers in the system is shown below:

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