Answer:
The present value of this cash flow will be decreased following the increase in the interest rate.
Explanation:
We have the formula for calculating present value is:
PV = FV / ( 1+r)^n
where:
PV is the present value
FV is the future value which is $10,000 in the described question
r is the discount rate which is the interest rate
n is the number of discounting periods which is one year in the described question
So, once the interest rate increase, the denominator - (1+r)^n - will increase. Then, if FV remains constant, PV will decrease.
So, The present value of this cash flow will be decreased following the increase in the interest rate.
Answer:
The correct answer is c) 3.7
.
Explanation:
The first thing we should do is calculate inflation: (2.40 - 2.37) / 2.37 = 1.3
Inflation Rate = 1.3
2.) Calculate the real interest rate
Real interest rate = nominal interest rate - inflation rate
5 - 1.3 = 3.7
3.7 is the real interest rate
The Judge since he is in charge and what he says goes
Answer:
To assess the market potential for up-and-coming businesses
Explanation:
Knowledge in entrepreneurship will give you to ability to understand a couple of things:
- The types of products that currently desired by the market.
- The strength and weaknesses of several business models
- The knowledge on how to scale business operations
Even though investors do not own their own business, understanding all this will help them understand which companies are most likely to succeed. They can put their investments on those companies and maximize the amount of return that they can get from their investment.
They are in debt meaning they owe money. That does not mean there is no income coming in.
