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Suppose you were borrowing money to buy a car. Consider the following situations. Situation 1: Suppose...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Score: 0 of 1 pt + 8 of 26 (7 complete) HW Score: 22 31%, 58...
Score: 0 of 1 pt + 8 of 26 (7 complete) HW Score: 22 31%, 58 of 26 pts Concept: Price Indexes 2 Question Help O Price indexes can be used to compare prices across different periods Suppose that a year of tuition for college at public institutions averaged a cost of 1 0 and that the index was 111 in 1989 If the CPI index was 214 in 2000, then the cost of tuition in 2000, as the result...
Suppose you have $22,000 today. You would like to be able to buy a car that...
Suppose you have $22,000 today. You would like to be able to buy a car that will cost $43,300 in 10 years. What annually compounded interest rate would you need to earn in order to be able to buy the car? Enter your answer as a percentage rounded 2 decimal places. Do not enter the % sign. Enter your answer below. Number Find the value of the following: [ (1.1)9–1] 0.1 1,220 Enter your response below, rounded to two decimal...
Suppose you take out a car loan that requires you to pay $9,000 now, $3,000 at...
Suppose you take out a car loan that requires you to pay $9,000 now, $3,000 at the end of year 1, and 56,000 at the end of year 2. The interest rate is 1% now and increases to 7% in the next year. What is the present value of the payments? Enter your response below rounded to 2 decimal places Number Suppose you will receive payments of $2,000, S7,000, and $8,000 in 3, 6, and 7 year(s) from now, respectively....
Suppose you borrow $600 of principal that must be repaid at the end of two years,...
Suppose you borrow $600 of principal that must be repaid at the end of two years, alond with interest of 4 percent a year. If the annual inflation rate turns out to be 8 percent, (a) What is the real rate of interest on the loan? Instructions: Enter your response 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 percent (b) What is...
Macroeconomic Canadian education Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the...
Macroeconomic Canadian education
Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the Real Interest Rate In this exercise, we see why the real cost of borrowing is equal to the real interest rate. 5. Since a borrower's actual dollar payments are based on the nominal interest a. rate, it is sometimes difmicult to see why the real cost of borrowing is equal to the real interest rate. Consider a family that buys a new house for...
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1....
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...
An investment will pay you $29,900 in 11 years. The stated interest rate is 9% (APR)....
An investment will pay you $29,900 in 11 years. The stated interest rate is 9% (APR). If interest is compounded continuously, what is the present value? Enter your response below rounded to two decimal places Number If the nominal interest rate is 4% and the real interest rate is 1%, what is the inflation rate? Enter your answer as a percentage. Do not enter the percentage sign in your answer Enter your response below (rounded to 2 decimal places)
Suppose that you buy a 1-year maturity bond with a coupon of 8.8% paid annually. If...
Suppose that you buy a 1-year maturity bond with a coupon of 8.8% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 10.70%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Real Rate of Return 4% ----> ?% 6% ---> ?% 10.70% ----> ?%
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Score: 0 of 1 pt + 8 of 26 (7 complete) HW Score: 22 31%, 58 of 26 pts Concept: Price Indexes 2 Question Help O Price indexes can be used to compare prices across different periods Suppose that a year of tuition for college at public institutions averaged a cost of 1 0 and that the index was 111 in 1989 If the CPI index was 214 in 2000, then the cost of tuition in 2000, as the result...
Suppose you have $22,000 today. You would like to be able to buy a car that will cost $43,300 in 10 years. What annually compounded interest rate would you need to earn in order to be able to buy the car? Enter your answer as a percentage rounded 2 decimal places. Do not enter the % sign. Enter your answer below. Number Find the value of the following: [ (1.1)9–1] 0.1 1,220 Enter your response below, rounded to two decimal...
Suppose you take out a car loan that requires you to pay $9,000 now, $3,000 at the end of year 1, and 56,000 at the end of year 2. The interest rate is 1% now and increases to 7% in the next year. What is the present value of the payments? Enter your response below rounded to 2 decimal places Number Suppose you will receive payments of $2,000, S7,000, and $8,000 in 3, 6, and 7 year(s) from now, respectively....
Suppose you borrow $600 of principal that must be repaid at the end of two years, alond with interest of 4 percent a year. If the annual inflation rate turns out to be 8 percent, (a) What is the real rate of interest on the loan? Instructions: Enter your response 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 percent (b) What is...
Macroeconomic Canadian education
Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the Real Interest Rate In this exercise, we see why the real cost of borrowing is equal to the real interest rate. 5. Since a borrower's actual dollar payments are based on the nominal interest a. rate, it is sometimes difmicult to see why the real cost of borrowing is equal to the real interest rate. Consider a family that buys a new house for...
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...
An investment will pay you $29,900 in 11 years. The stated interest rate is 9% (APR). If interest is compounded continuously, what is the present value? Enter your response below rounded to two decimal places Number If the nominal interest rate is 4% and the real interest rate is 1%, what is the inflation rate? Enter your answer as a percentage. Do not enter the percentage sign in your answer Enter your response below (rounded to 2 decimal places)
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