In this case, Charlie could benefit financially because <span>Charlie can earn interest on his original deposit.
One of the things that Bank used to attract saving from the people is by offering interest rates for the total saving amount. Which means, the amount of money that Charlie deposited in the bank will grow in value based on the the rates that appointed by the bank (minus the service charge)</span>
Matthew can recover nothing because he was able to sell the land to someone else. Matthew has already sold his land as the part of his real estate to another person for $31,000 and Mathew could not recover anything from the first contract because Betty could not pay for the real estate price<span>. Although he has lost $4,000, he will not have any problem with the first contract with Betty.</span>
Answer: a. I, II and III are true
Explanation:
From the question, the statements that are true are:
I. 4% is the desired real rate of interest. II. 6% is the approximate nominal rate of interest required.
III. 2% is the expected inflation rate over the period.
4% is the desired real rate of interest because that's the rate at which the investor is willing to buy the goods in future.
2% is the expected inflation rate over the period because at that rate, there's expectation of future rise in price while 6% is the approximate nominal rate of interest required which is the addition of the 4% and the 2%.
Answer:
37% compounded annually
Explanation:
To find the answer we need to follow this formula:
Where:
- P = Present value of the stock
- I = Initial value of the stock
- r = Interest rate
- n = number of compounding periods
Now we plug the amounts into the formula:
900,000 = 150,000 (1 + r)^13
900,000 / 150,000 = (1 + r)^13
60 = (1 + r)^13
Ln60 = 13 Ln(1 + r)
4.09 / 13 = Ln(1 +r)
0.31 = Ln(1 + r)
e0.31 = Ln(1 + r)
1.37 = 1 + r
1.37 - 1 = r
0.7 = r
Thus, the annual interest rate is 37%
