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sergeinik [125]
3 years ago
8

Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with interest of 5 percent per year. I

f the annual inflation rate turns out to be 10 percent,
Instructions: Enter your responses rounded to the nearest whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
a. What is the real rate of interest on the loan?
b. What is the real value of the principal repayment?
Hint: Future value = Present value × (1 + Growth in prices)t, where t is the number of years evaluated, e.g., The real value of loan repayment = Amount of loan × (1 + Real interest rate)t
c. Who loses, the debtor or the creditor?
Business
1 answer:
gogolik [260]3 years ago
8 0

Answer:

Following are the solution to the given question:

Explanation:

For point a:

Calculating the Real rate of interest:

\to 5\%-10\%\\\\\to -5\%

For point b:

Calculating the Real value of loan repayment:

\to \$1000 (1-0.05)^2\\\\\to \$902.5

For point C:

In this question, the creditor receives less than what he granted he losses that's why the creditor is the correct answer.

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Which component of consumption has a negative or indirect relationship with consumption?
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Interest rates

Explanation:

Here are the options to the question : o Interest rates o Real income Real income o Expected future income o Wealth

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Presented below is information related to Dino Radja Company.
Alja [10]

Answer:

Dino Radja Company

The ending inventory for Dino Radja Company for 2017 through 2022 using the dollar-value LIFO method:

Date             Ending Inventory   Price   Dollar Value

(End-of-Year Prices)                           Index        LIFO

December 31, 2017      $ 80,000            100    $80,000 ($80,000*1.00)

December 31, 2018        115,500            105      110,000 ($115,500/1.05)

December 31, 2019       108,000            120      90,000 ($108,000/1.20)

December 31, 2020      122,200            130      94,000 ($122,200/1.30)

December 31, 2021       154,000            140     110,000 ($154,000/1.40)

December 31, 2022      176,900            145    122,000 ($176,900/1.45)

Explanation:

a) Data and Calculations:

Date             Ending Inventory   Price Index

(End-of-Year Prices)    

December 31, 2017      $ 80,000                100

December 31, 2018        115,500                 105

December 31, 2019       108,000                 120

December 31, 2020      122,200                 130

December 31, 2021       154,000                 140

December 31, 2022      176,900                 145

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drek231 [11]

Answer:

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Explanation:

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Keynesian economic basically means that the goverment has to step in and try to stimulate economic wealth. This is were macroeconomics comes to play. Laissez fair in Belgium means hands off or lay. This explains why laissez fair is a strategy our previous presidents used to stop the Great Depression. In other words it means the govermeant steps out of helping hand and count on capitalism.
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3 years ago
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