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3 years ago

13

If Treasury bills are currently paying 5.2 percent and the inflation rate is 2.7 percent, what is the approximate real rate of i

nterest?

1 answer:

Alexxandr [17]3 years ago

3 0

Answer:

2.43 %

Explanation :

Real Interest rate = (1 + nominal rate) / (1 + inflation rate) - 1

therefore,

Real Interest rate = 1.052 / 1.027 - 1

= 2.43 %

the approximate real rate of interest is 2.43 %

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Vaughn Manufacturing purchased equipment for $39200. Sales tax on the purchase was $2352. Other costs incurred were freight char

Ber [7]

Answer:

the cost of the equipment is $42,979

Explanation:

The computation of the cost of the equipment is as follows:

= Purchase value of an equipment + sales tax on the purchase + other cost incurred + installation cost

= $39,200 + $2,352 + 588 + $657

= $42,979

Hence, the cost of the equipment is $42,979

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3 years ago

Item 3Item 3 Cutter Enterprises purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-yea

Rus_ich [418]

Answer:

$27,400 and $59,600

Explanation:

The computation of the depreciation expense and the book value using the sum of-the-years'-digits method is shown below:

Depreciation expense is

= (Purchase cost - residual value) × useful life ÷ sum of years

= ($87,000 - $4,800) × 5 years ÷ (5 + 4 + 3 + 2 + 1)

= $27,400

And, the book value is

= Purchase cost - depreciation expense

= $87,000 - $27,400

= $59,600

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3 years ago

Janet, a manager at hollyoak systems, is known for her passionate and people-friendly ways. janet knows all her employees well a

PtichkaEL [24]

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3 years ago

Read 2 more answers

Lakeside Components wishes to purchase parts in one month for sale in the next. On June 1, the company has 15,000 parts in stock

Kryger [21]

Answer:

Instructions are below.

Explanation:

Giving the following information:

Beginning inventory (parts)= 15,000 parts

Sales June= 13,600

Sales July= 10,500

Sales August= 12,700

Parts are purchased at a wholesale price of $30.

Purchasing arrangement:

60 percent on the month of the purchase.

40 percent in the following month.

Lakeside purchased 14,000 parts in May.

A) To calculate the purchase for June and July, we need to use the following formula:

Purchases= sales + desired ending inventory - beginning inventory

June= 13,600 - 15,000= -1,400

July= 10,500 - 1,400= 9,100

B) Cash Required:

Purchase from the month

Purchase from the month before

<u>June:</u>

Purchase from the month= 0

Purchase from the month before= (14,000*30)*0.4= 168,000

<u>July:</u>

Purchase from the month= (9,100*30)*0.6= 163,800

Purchase from the month before= 0

3 0

3 years ago

Matt inherited as a trust a fifteen-year annuity-immediate with annual payments. He has been told that the annuity payments earn

Pavel [41]

Answer:

effective annual interest rate = 6.32%

annual payment = $1,585

Explanation:

I believe that this is an ordinary annuity, so we can use the future and present value of an ordinary annuity formula:

FV = annual payment x FV annuity factor, so annual payment = FV / FV annuity factor

PV = annual payment x PV annuity factor, so annual payment = PV / PV annuity factor

we can equal both equations:

PV / PV annuity factor = FV / FV annuity factor

FV / PV = FV annuity factor / PV annuity factor

$37,804.39 / $15,077.10 = FV annuity factor / PV annuity factor

2.5074 = FV annuity factor / PV annuity factor

the easiest way to solve this is to use an annuity table since we already know that there are 15 periods (I used an excel spreadsheet):

%,15 periods FV annuity factor PV annuity factor FV/PV

1 16.097 13.865 1.1609

2 17.293 12.849 1.34586

3 18.599 11.938 1.55797

4 20.024 11.118 1.80104

5 21.579 10.380 2.07890

<u>6 23.276 9.7122 2.3966</u>

<u>7 25.129 9.1079 2.7590</u>

8 27.152 8.5595 3.1721

9 29.361 8.0607 3.6425

10 31.772 7.6061 4.4112

The interest rate must be between 6 and 7%:

%,15 periods FV annuity factor PV annuity factor FV/PV

6 23.276 9.7122 2.3966

6.1 23.45404 9.6461 2.43145

6.2 23.63369 9.5858 2.46549

6.3 23.81491 9.52467 2.50034

6.31 23.83312 9.51851 2.50387

<u>6.32 23.85135 9.51236 2.5074</u>

6.4 23.99773 9.46337 2.53585

effective interest rate = 6.32% per year

annual payment = $37,804.39 / 23.85135 = $1,585

6 0

3 years ago