Bro, I watched you kill him and vent.

Eric receives a portion of his income from his holdings of interest-bearing U.S. government bonds. The bonds offer a real intere

MArishka [77]

Solution :

Given :

The bonds offer a $\text{real interest rate}$ of 4.5% per year

Tax rate = 10% = 0.10

Inflation rate = 2

$\text{Nominal interest rate}$ = $\text{real interest rate}$ + $\text{inflation rate}$

$\text{Nominal interest rate}$ = 2 + 4.5

= 6.5

$\text{After tax nominal rate}$ = $\text{Nominal interest rate}$ $\times (1-\text{tax rate})$

$\text{After tax nominal interest rate}$ = $6.5 \times (1-0.10)$

$=6.5 \times 0.90$

= 5.85

After tax real interest rate = $\text{after tax nominal rate}$ - $\text{inflation rate}$

= 5.85 - 2.0

= 3.85

$\text{Inflation rate}$ = 7.0

$\text{Real interest rate = 4.5}$

$\text{Nominal interest rate}$ = $\text{real interest rate}$ + $\text{inflation rate}$

= 7 + 4.5

= 11.5

$\text{After tax nominal interest rate}$ = $\text{Nominal interest rate}$ $\times (1-\text{tax rate })$

$=11.5 \times (1 - 0.10)$

$=11.5 \times 0.90$

= 10.35

$\text{After tax nominal interest rate}$ = 11.5 x (1 - 0.10)

= 11.5 x 0.90

= 10.35

$\text{After tax nominal interest rate}$ = $\text{after tax nominal rate}$ - $\text{inflation rate}$

= 10.35 - 7.0

= 3.35

Putting all the value in table :

$\text{Inflation rate}$ Real interest Nominal interest After tax nominal After tax

rate rate interest rate interest rate

2.0 4.5 6.5 5.85 3.85

7.0 4.5 11.5 10.35 3.35

Comparing with the $\text{higher inflation rate}$ , a $\text{lower inflation rate}$ will increase the after after tax real interest rate when the government taxes nominal interest income. This tends to encourage saving, thereby increase the quantity of investment in the economy and the increase the economy's long-run growth rate.

7 0

3 years ago

An entrenpeneur knits sweaters for sale. The entrenpeneur has fixed costs of $100. When he makes 10 sweaters in one month, he mu

Likurg_2 [28]

Answer:

marginal cost = $2

Explanation:

given data:

cost on wool when 10 sweater made in one month = $15

cost on wool when 11 sweater made in one month = $17

fixed cost = $100

In case of no other cost present, marginal cost is given by

Marginal cost = cost of eleven sweaters - cost of ten sweaters

= $17 -$15

= $2

8 0

3 years ago

Sacrificing your own self interests for the good of the overall goal is ______.

Firlakuza [10]

That is intiative, its basically commiting yourself to doing something and putting everything else behind you

8 0

3 years ago

Read 2 more answers

Argus Finnian is a calculating, self-centred salesperson. He never engages in relationship marketing. He looks on any sales situ

Korolek [52]

Answer:

c. pre-conventional morality

Explanation:

Preconventional morality is the first stage of moral development according to Kohlberg's model of moral development. It is the stage in which the children decides according to the consequences the actions will bring to them. The consequences which the behavior may is on the primary focus. In the above case, Finnian gives attention to the result before taking any of the steps.

6 0

3 years ago

Red Hot Chili Peppers Co. had the following activity in its most recent year of operations.Classify the items as (1) operating—a

lora16 [44]

Answer:

a. Purchase of Equipment - (3) investing

b. Redemption of bonds payable - (4) financing

c. Sale of building - (3) investing

d. Depreciation - (1) operating—add to net income;

e. Exchange of equipment for furniture - (5) significant noncash investing and financing activities

f. Issuance of capital stock - (4) financing

g. Amortization of intangible assets - (1) operating—add to net income

h. Purchase of treasury stock - (4) financing

i. Issuance of bonds for land - (5) significant noncash investing and financing activities

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

7 0

3 years ago