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Sedbober [7]
2 years ago
14

Suppose the rate of return on a 10-year T-bond is currently 5.00% and that on a 10-year Treasury Inflation Protected Security (T

IP) is 1.50%. Suppose further that the maturity risk premium on a 10-year T-bond is 2.9%, that no maturity risk premium is required on TIPs, and that no liquidity premiums are required on any T-bonds. Given this data, what is the expected rate of inflation over the next 10 years
Business
1 answer:
MAXImum [283]2 years ago
4 0
I am sorry but I do not know or understand this one at all but I think it’s 10
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Suppose that real GDP per capita in the United States is $49,000. If the long-term growth rate of real GDP per capita is 1.6% pe
Stells [14]

Answer:

n = 43.6673555

it will take 43.67 year to achice a real GDP of 98,000

Explanation:

we solve for time of a future lump-sum:

PV (1+r)^n = FV\\(1+r)^n = FV / PV\\

we use logarithmics properties:

(1+r)^n = FV/PV\\log_{1+r}FV/PV = n\\n = \frac{log FV/PV}{log(1+r)}

PV 49,000

FV 98,000

rate 1.6%

n = \frac{log 98,000/49,000}{log(1+0.016)}

n = 43.6673555

4 0
2 years ago
What are the indicators are used to carry out capital budgeting for different ventures of a company.
Kryger [21]

Answer:

The answer is below

Explanation:

The indicators that are used to carry out capital budgeting for different ventures of a company are:

1. Profitability of the project

2. Profitability for equity investors

3. Financial sustainability of the project

These essential indicators assist the firms to evaluate a future project's lifetime cash inflows and outflows to know whether the probable returns would be yielded and satisfy an adequate target goal.

4 0
3 years ago
Debt Management Ratios You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), bot
Scrat [10]

Answer:

Please see attachment

Explanation:

Please see attachment

4 0
2 years ago
Apex Fitness Club uses straight-line depreciation for a machine costing $23,860, with an estimated four-year life and a $2,400 s
maria [59]

Answer:

1. Book value at end of year 2 = $13,130

2. Depreciation from year 3 for last 3 years = $3,710 each year, that is $11,130 for three years.

Explanation:

As for the provided details, we have:

Cost of machinery = $23,860

Expected life = 4 years

Salvage value = $2,400

Straight line depreciation = \frac{23,860 - 2,400}{4} = 5,365

Under straight line method depreciation remains constant for life of asset.

Book value at end of year 2 = $23,860 - ($5,365 \times 2) = $13,130

Thereafter in the beginning of year 3 the estimate is made to realize that the total remaining life expected is 3 years, with salvage value $2,000

Thus, depreciation from year 3 = \frac{13,130 - 2,000}{3} = 3,710

Therefore, depreciation from year 3 to year 5 = $3,710 each year.

Total depreciation of last 3 years = $3,710 \times 3 = $11,130

3 0
2 years ago
Suppose that last year the equilibrium price and the quantity of good X were $10 and 5 million pounds, respectively. Because of
grandymaker [24]

Answer:

Explanation:

Last year the equilibrium price and the quantity of good X were $10 and 5 million pounds, respectively.

The producer surplus is the difference between the minimum price that a producer is willing to accept and the price it actually gets. It can be found by calculating the area between the supply curve and the market price.

The producer surplus

= \frac{1}{2}\ \times\ base\ \times\ height

= \frac{1}{2}\ \times\ quantity\ \times\ price

= \frac{1}{2}\ \times\ 5\ \times\ 10

= $25

Because of strong demand this year, the equilibrium price and the quantity of good X are $12 and 7 million pounds, respectively.

The producer surplus

= \frac{1}{2}\ \times\ base\ \times\ height

= \frac{1}{2}\ \times\ quantity\ \times\ price

= \frac{1}{2}\ \times\ 7\ \times\ 12

= $42

5 0
2 years ago
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