LAST WORD Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the end of the year. Assuming no inflation, what is the real interest rate? What would the interest rate be if the $250 of interest had been dis- counted at the time the loan was made? What would the inter- est rate be if you were required to repay the loan in 12 equal monthly installments?
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- A company borrowed P100,000 to be repaid after 3 years at a market interest rate of 12% pa compounded quarterly. If inflation is 5% pa what is the total real interest earned by the lender in 3 years? Select the correct response: O P23,163 O P23,587 O P26,410 O P23,595 O P20,400is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. The present value of a loan in which $1000 is to be paid out a year from today with the interest rate equal to 1% is $. (Round your response to the neareast two decimal place) If a loan is paid after two years, and the amount $1000 is to be paid then with a corresponding 2% interest rate, the present value of the loan is $. (Round your response to the neareast two decimal place) Next 11:41 AMCalculate the Present Value of the cash flow diagram below using the regular equation, then using the application of the uniform payment formula. (Obviously, both solutions should yield the same answer.) 0 $100 1 2 Interest Rate = 5% per year. $100 3 4 $100 LO 5 Years
- Question 3 1. Suppose that inflation is 5% between years 1 and 2. Now suppose your hourly wage is $20/hour. What will your wage have to be for your real wage to stay the same from year 1 to year 2? O 20.10 O 30 O 25.75 O 21What is the value of n with interest 10% that makes the present value equal to O? 100 100 3. lo00 Given formula: (1+i)"-1 P=A- iX(1+i)"O Question 44 > Suppose you want to have $500,000 for retirement in 30 years. Your account earns 10% interest. a) How much would you need to deposit in the account each month? b) How much interest will you earn? > Next Question
- 4- Suppose the price of a car is 400,000 TL now. If the inflation rate is 8% per year, how much would the price be after 3 years and if you invest 325,000 TL now to the bank at the market rate of 15%, would you be able to buy the tar? a) 503,885 TL; Can Buy b) O 490,017 TL; Cannot Buy c) O 490,017 TL; Can Buy 205 d) 106,460 TL; Cannot Buy 503,885 TL; Cannot Buy Leave blankSuppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 154. What was the inflation rate during 2009? 7.1 percent 10 percent O 14.2 percent O 9.1 percent5.0 4.0 3.0 2.0 1.0 1975 1985 1995 2005 Year In the above figure, which period(s) show deflation? O Only from 1995 to 2005. O Only from 1985 to 1995. O None of the above because there is no year with deflation in the above figure. O From both 1975 to 1985 and from 1995 to 2005. Inflation rate (percent per year)
- Suppose that you earn $320 in year 1 and will ean $720 in year 2. If you borrow money against your future income you will have and additional $576 to spend in year 1, and if you lend all of your current income you will have and additional $400 to spend in year 2. In both years you consume only food which costs $1 per kilogram in each year. What is the interest rate that you borrow and lend at? R= Let your MRS for food in year 1 with food in year 2 be given by the formula where F is the amount of food consumed this year and F is the amount of food consumed next year. Calculate your consumption bundle: F = F = Suppose the interest rate at which you can borrow and lend changes to 20%. Calculate your new consumption bundle: F = F2 = Which interest rate is preferred? The initial interest rate found in part 1 O The new interest rate, 20%▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which $3000 is to be paid out a year from today with the interest rate equal to 3% is $enter your response here. (Round your response to the neareast two decimal place) Part 3 If a loan is paid after two years, and the amount $3000 is to be paid then with a corresponding 1% interest rate, the present value of the loan is $enter your response here. (Round your response to the neareast two decimal place)An annuity pays $1100 per year for 13 years Inflation is 6 percent per year a. If the real MARR Is 8 percent, what is the current dollar MARR? b. Using the current dollar MARR from part (a), calculate the present worth of the annuity a. The current dollar MARR is percent (Type an integer or decimal rounded to two decimal places as needed) b. The present worth of the annuity is S (Type an integer or decimal rounded to two decimal places as needed)