Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with interest of 5 percent per year. If the annual inflation rate turns out to be 10 percent,
Instructions: Enter your responses 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.
a. What is the real rate of interest on the loan?
b. What is the real value of the principal repayment?
Hint: Future value = Present value × (1 + Growth in prices)t, where t is the number of years evaluated, e.g., The real value of loan repayment = Amount of loan × (1 + Real interest rate)t
c. Who loses, the debtor or the creditor?

Answers

Answer 1

Answer:

Following are the solution to the given question:

Explanation:

For point a:

Calculating the Real rate of interest:

[tex]\to 5\%-10\%\\\\\to -5\%[/tex]

For point b:

Calculating the Real value of loan repayment:

[tex]\to \$1000 (1-0.05)^2\\\\\to \$902.5[/tex]

For point C:

In this question, the creditor receives less than what he granted he losses that's why the creditor is the correct answer.


Related Questions

Which of these are considered both short- and long-term investments? Select four options.
CDs
stocks
savings accounts
mutual funds
bonds
commodities

Edge answers please

Answers

Answer:

CDs

Stocks

Mutual funds

Commodities

Explanation:

:)

'Investments' are defined as the 'process of allocating money having an aim of receiving a profit.'

The items that can be considered as both the short, as well as, long-term investments would be:

A). CDs

B). Stocks

C). Mutual funds

E). Commodities

A CD or Certificate of Deposit(CD) is characterized as both the 'short, as well as, long-term' investment because it provides interest and offers a lump-sum on its maturity. Stocks are also such an investment as it offers both intra-day trade and long-term holding options as well. Mutual funds are also a good option for generating both regular incomes in the short-term and big capital gain over a time period. Commodities like gold, crude oil, etc. also offer such an option as it is the item whose price keeps growing and thereby providing an opportunity to earn.

Thus, options A, B, C, and E are the correct answers.

Learn more about 'short-term investment' here:

brainly.com/question/16462918

Claremont Company specializes in selling refurbished copiers. During the month, the company sold 220 copiers for total sales of $836,000. The budget for the month was to sell 215 copiers at an average price of $4,000. The sales price variance for the month was:

Answers

Answer:

$44,000 Unfavourable

Explanation:

Given the above information, sales price variance is computed as

= (Actual sales price - Standard/Budgeted sales price) × Actual units sold

Actual sales price = $836,000/220 = $3,800

Standard sales price = $4,000

Actual units sold = 220

= ($3,800 - $4,000) × 220

= $44,000 Unfavourable

The above is unfavourable sales price variance because you can sell the copier at a higher price of $4,000 than the actual price of $3,800

Braden and Sons, Inc., paid cash to purchase equipment costing $342,000 this year. Also this year, the company sold for $70,000 cash equipment that originally cost $230,000 5 years ago. How should these transactions be listed in the statement of cash flows

Answers

Answer:

The purchases and the sales of equipment must be shown separately as a decrease to cash for $342,000 (purchase) and an increase of $70,000 (sale).

Explanation:

Since the cash is paid for purchased an equipment so the same should be shown in the investing activities as the cash outflow and the company sold $70,000 cash equipment so this also to be shown as the investing activities as the cash inflow

Therefore the last option is correct

In listing these transactions in the Statement of Cash Flows, the proper thing to do is: The purchases and the sales of equipment must be shown separately as a decrease to cash for $342,000 (purchase) and an increase of $70,000 (sale).

The Statement of Cashflows:

Shows the cash transactions of a company Can only show transactions involving actual cash

The amount that was used to purchase equipment was in cash so this will reduce the amount of cash that the company has.

The cash received from the sale of the equipment will be an increase in the company's cash. The previous price of the equipment is irrelevant because it does not involve cash.

In conclusion, the cash made should be added and the cash spent should be deducted.

Find out more at https://brainly.com/question/735261.

Rhoda Morgenstern just settled an insurance claim. The settlement calls for increasing payments over a 20-year period. The first payment will be paid one year from now in the amount of $50,000. The following payments will increase by 2 percent annually. What is the value of this settlement to Rhoda today if she can earn 5 percent on her investments

Answers

Answer:

PV = $733,271

Explanation:

From the given information:

The annual payment (P)  = $50,000

number of years (n) = 20

The growth percentage = 2% = 0.02

Rate of percentage earned = 5% = 0.05

Using the formula illustrated below to determine the Present Value (PV) of a growing annuity;

[tex]PV = \dfrac{P}{r-g}\Big ( 1 - \Big ( \dfrac{1+g}{1+r} \Big) ^n \Big)[/tex]

[tex]PV = \dfrac{50000}{0.05-0.02}\Big ( 1 - \Big ( \dfrac{1+0.02}{1+0.05} \Big) ^{20} \Big)[/tex]

[tex]PV = \dfrac{50000}{0.03}\Big ( 1 - \Big ( \dfrac{1.02}{1.05} \Big) ^{20} \Big)[/tex]

[tex]PV =1666666.667 \Big ( 1 - \Big ( 0.9714285714 \Big) ^{20} \Big)[/tex]

[tex]PV =1666666.667 \Big ( 1 -0.5600379453 \Big)[/tex]

[tex]PV =1666666.667 \Big (0.4399620547 \Big)[/tex]

[tex]PV =\$733270.0913 \\ \\ \mathbf{PV \simeq \$733,271}[/tex]

Waterpark Co. had a decrease in deferred tax liability of $38 million, a decrease in deferred tax assets of $28 million, and an increase in tax payable of $118 million. The company is subject to a tax rate of 25%. The total income tax expense for the year was: Group of answer choices

Answers

Answer:

the total income tax expense is $208 million

Explanation:

The computation of the total income tax expense for the year is shown below;

Income tax expense = Increase in tax payable + decrease in deferred tax assets - decrease in deferred tax liability

= $118 million + $128 million - $38 million

= $208 million

Hence, the total income tax expense is $208 million

Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $16.00 per unit. The unit cost for the business to make the part is $20.00, including fixed costs, and $11.00, excluding fixed costs. If 32,842 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it

Answers

Answer:

$164,210 decrease

Explanation:

Calculation to determine what would be the amount of differential cost increase or decrease from making the part rather than purchasing it

Differential cost increase or decrease=(32,842 * 16)- (32,842 * 11)=

Differential cost increase or decrease=$525,472-$361,262

Differential cost increase or decrease=$164,210 decrease

Therefore what would be the amount of differential cost increase or decrease from making the part rather than purchasing it is $164,210 decrease

Additional data for the current year are as follows: (a) Net income, $75,800. (b) Depreciation reported on income statement, $38,000. (c) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $150,000. (d) Bonds payable for $75,000 were retired by payment at their face amount. (e) 2,500 shares of common stock were issued at $30 for cash. (f) Cash dividends declared and paid, $40,000. (g) Investments of $100,000 were sold for $125,000.

Answers

Answer:

Note: Full question is attached as picture below

                                    Barry Company

                            Statement of Cash Flows

                 For the Tear Ended December 31, Year 2

Cash flows from operating activities:

Net income                                             $75,800

Adjustments to reconcile net income to

net cash flow from operating activities:

Depreciation expense                           $38,000

Gain on sale of investments                -$25,000

Changes in current operating

assets & liabilities:

Decrease in Accounts receivable        $9,200  

Increase in inventories                        -$16,000

Increase in Accounts payable              $12,500

Net cash flow from operating activities                     $94,500

Cash flows from investing activities:

Sale of investments                               $125,000

Purchase of equipment                        -$150,000

Net cash flow used for investing activities               -$25,000

Cash flows from financing activities:

Retirement of bonds payable               -$75,000  

Issuance of common stock                    $75,000

Payment of dividends                           -$40,000

Net cash flow used for financing activities               -$40,000

Net increase in cash                                                      $29,500

Cash at the beginning of the year                                 $42,500

Cash at the end of the year                                           $72,000

There are historically three 32-month periods of generally rising prices in the stock market for every one 9-month period of falling prices. This observation leads you to conclude that the stock market exhibits a: random pattern. trend pattern seasonal pattern. cyclical pattern.

Answers

Answer:

cyclical pattern

Explanation:

In the given situation, it is mentioned that the data represent an upward trend and it shows an downward trend for exact 32 months and 9 months so here we can say that the data should be of cyclical in nature

So as per the given situation, it is the cyclical pattern

Therefore the same to be considered and relevant

Antony Johnson works in the human resources department of a small wholesale company. His boss has delegated to Johnson the job of finding a replacement for the company's shipping dock supervisor who has recently retired. Johnson will have total responsibility for filling this position. Johnson will be:

Answers

Answer:

made accountable

Explanation:

In an organisation when total responsibility is placed on a staff for a particular task, he is accountable for the outcome.

In the given scenario his boss has delegated to Johnson the job of finding a replacement for the company's shipping dock supervisor who has recently retired.

Johnson will need to find a person that meet the technical and moral standards that the job requires.

Johnson will be held accountable for the performance of the replacement staff.

Consider two perfectly negatively correlated risky securities A and B. A has an expected rate of return of 10% and a standard deviation of 16%. B has an expected rate of return of 8% and a standard deviation of 12%. The risk-free portfolio that can be formed with the two securities will earn a(n) _____ rate of return.

Answers

I’m sorry for making it happen again but it’s not like that

In the current year, she sold her interest in Activity D for a $10,000 gain. Activity D, which had been profitable until last year, had a current loss of $1,500. Answer the following questions to determine how the sale of Activity D affects Sarah's taxable income in the current year. a. The amount of suspended losses carried forward to the year of the sale is $fill in the blank 1 20,000 . b. What amount of the suspended losses is allocated to Activity D

Answers

Answer:

      a. -$20,000

      b. -$2,000

Explanation:

a. The amount of suspended losses carried forward to the year:

= 30,000 + (-30,000) + (-15,000) + (-5,000)

= -$20,000

b. Suspended losses allocated to Activity D:

First find the total amount of losses:

= -30,000 - 15,000 - 5,000

= -$50,000

Activity B accounted for -$5,000 of this loss.

Suspended losses to be allocated to D would therefore be:

= -5,000 / - 50,000 * -20,000

= -$2,000

A company projects an increase in net income of $135,000 each year for the next five years if it invests $900,000 in new equipment. The equipment has a five-year life and an estimated salvage value of $300,000. What is the annual rate of return on this investment

Answers

Answer:

the annual rate of return is 22.50%

Explanation:

The computation of the annual rate of return is shown below:

Average investment is

= ($900,000 + $300,000) ÷ 2

= $600,000

Now

Annual rate of return is

= Annual net income ÷ Average investment

= $135,000 ÷ $600,000

= 22.50%

hence, the annual rate of return is 22.50%

Assume that Saudi Arabia has production possibilities to produce either 100 barrels of oil using 100 worker hours or 25 bushels of corn using 100 worker hours. If it decides to produce 60 barrels of oil, how many bushels of corn can it produce

Answers

Answer: 10 bushels

Explanation:

If they produce 100 barrels of oil using 100 worker hours, it means that the number of work hours taken for 1 barrel is:

= 100 / 100

= 1 work hour

For bushels however, 1 worker hour produces:

= 25 / 100

= 0.25 bushels of corn

If 60 barrels of oil are produced, it means 60 worker hours were used which would leave 40 worker hours.

Bushels of corn produced is therefore:

= 40 * 0.25

= 10 bushels

nm bn nb nbg ghcgfhjhibhjbhj

Answers

Abshuwqishfwjaoajsbwvwgwjajsjbsvwjwkskdvevgwwhhwhwhwhwhwjeow

Umm Chile... anyway so

MFK Corp. wants to raise capital and is considering an offer of bonds and debentures. It is not sure of a particular disclosure requirement, so MFK poses its question to the SEC and requests an interpretation letter. If the SEC issues an interpretive letter addressing MFK's question and MFK follows the statements contained in the letter, MFK cannot be penalized should the advice be incorrect.

a. True
b. False

Answers

Answer:

B FALSEEEEEEEEEEEEEEEEEEEE

Decentralizing Group of answer choices Is a trend that creates a head-quarter office Organizes business in independent business units Creates a more complex and less robust organization Decisions are made at the headquarters

Answers

Hi my name is Jeff and I will be your assistant today

The discount rate used to calculate the net present value of a capital budgeting project should be: a. The risk-free rate. b. The weighted average cost of capital. c. LIBOR. d. The internal rate of return.

Answers

Answer:

B

Explanation:

Capital budgeting is the determination of the profitability of proposed investments

One of the capital budgeting methods is the net present value

Net present value is the present value of after-tax cash flows from an investment less the amount invested.

the Weighted cost of capital is used to determine NPV

WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)

It is the minimum rate of return a company expects from a project

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested. It is a captial budgeting method

Lynch Company began operations in 2019. The company reported $24,000 of depreciation expense on its income statement in 2019 and $26,000 in 2020. On its tax returns, Lynch deducted $32,000 for depreciation in 2019 and $37,000 in 2020. The 2020 tax return shows a tax obligation (liability) of $12,000 based on a 25% tax rate.

Required:
Determine the temporary difference between the book value of depreciable assets and the tax basis of these assets at the end of 2019 and 2020.

Answers

Answer:

2019 $8,000

2020 $19,000

Explanation:

Calculation to determine the temporary difference between the book value of depreciable assets and the tax basis of these assets at the end of 2019 and 2020.

Calculation for 2019 Temporary differences

2019

Using this formula

2019 Temporary differences = 2019 Depreciation- 2019 depreciation expense

Let plug in the formula

2019 Temporary differences =$32,000 - $24,000

2019 Temporary differences= $8,000

Calculation for 2020 Temporary differences

Using this formula

2020 Temporary differences=(2019 Depreciation+2020 Depreciation)-( 2019 Depreciation expense+2020 Depreciation expense)

Let plug in the formula

2020 Temporary differences= ($32,000 + $37,000) - ($24,000 + $26,000)

2020 Temporary differences=$69,000-$50,000

2020 Temporary differences= $19,000

Therefore the temporary difference between the book value of depreciable assets and the tax basis of these assets at the end of 2019 and 2020 will be $8,000 and $19,000

You enter into a short crude oil futures contract at $43 per barrel. The initial margin is $3,375 and the maintenence margin is $2,500. One contract is for 1,000 barrels of oil. By how much do oil prices have to change before you receive a margin call

Answers

Answer:

The correct answer is "43.875". A further explanation is provided below.

Explanation:

The given values are:

Initial margin,

= $3,375

Maintenance margin,

= $2,500

Barrels of oil,

= 1,000

Now,

The loss on the position will be:

= [tex]3375-2500[/tex]

= [tex]875[/tex] ($)

then,

⇒  [tex]1000 (P - 43) = 875[/tex]

⇒  [tex]1000P-43000=875[/tex]

On adding "43000" both sides, we get

⇒  [tex]1000P-43000+43000=875+43000[/tex]

⇒                             [tex]1000P=43875[/tex]

⇒                                    [tex]P=\frac{43875}{1000}[/tex]

⇒                                        [tex]=43.875[/tex]

"You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.05 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?"

Answers

Answer: 1.95

Explanation:

The beta for the other stock in the portfolio will be calculated thus:

Portfolio Beta = (BetaA × WeightA) + (BetaB × WeightB) + (BetaC × WeightC)

= (BetaA × 1/3) + (1.05 × 1/3) + (0 × 1/3)

= (BetaA × 1/3) + 0.35 + 0

Beta A = 1-0.35 × 3

Beta A = 0.65 × 3

Beta A = 1.95

Why would an investor prefer purchasing bonds to purchasing stocks?
A. Unlike stocks, bonds are guaranteed to return a profit to the
investor.
B. Bonds are typically less risky than stocks.
O C. Unlike stocks, when an investor owns bonds, they own a tiny part
of the company
D. Bonds are more likely than stocks to make huge profits.

Answers

Answer:

B. Bonds are typically less risky than stocks.

Explanation:

Answer: B. Bonds are typically less risky than stocks

Explanation:a. p. e. x. (just took the test)

Information you might study in a particular class is called (blank)


an elective

a club

curriculum

an internship

Answers

Answer:

curriculum is the correct answer right no

Answer:

Information you might study in a particular class is called curriculum

MAD Inc. has a capital structure consisting of 40 percent debt and 60 percent common equity financing. The company has $400 million in net income and plans to pay out 25 percent of their earnings as dividends. What is the maximum amount of new financing that the company can raise without selling new common stock

Answers

Answer:

$500 million

Explanation:

Retained earnings = Income * (1 - Dividend payout percentage)

Retained earnings = $400 million * (1-0.25)

Retained earnings = $400 million * 0.75

Retained earnings = $300 million

Amount that can be raise without selling new stock: Retained earnings / % of equity financing in total capital

= $300 million / 60%

= $300 million / 0.60

= $500 million

On January 1, a company issued and sold a $399,000, 9%, 10-year bond payable, and received proceeds of $394,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:

Answers

Answer:

Cash Interest payable on Bond = $399,000*4.5% = $17,955

Discount to be amortized = ($399,000-$394,000)/20 = $250

Interest expense = $17,955+$250 = $18,205

Date   Journal Entry                                  Debit      Credit            

           Interest Expense                          $18,205

                 Discount on bonds payable                    $250

                 Cash                                                          $17,955

Other Questions
5. BHinduismG. When one lets go and livesothersItiple Choice, 1 pt each:6.What religions did not originate in South Asia?A. BuddhismB. IslamC. Hinduism For recessive trait to be expressed you need to receive the allele from both parents. True or false What is the solution to the inequality -3x - 5 < -20? Why do we call the conflict between the United States and the Soviet Union the Cold War? Why did it never become a real war? Which of the following is one way that humans can protect biodiversity? Can someone help me Evaluate the expression for a = 10 and b = 12.a+4(b3) The batting team (or offense) scores a run only when the runner tags "HOME PLATE" TrueFalse it is multiple choice and i know 100% that the answer is no, but i dont know the answer for the solution part problem of volume that equals 9 work please Help me ASAP!! Find the area of the whole blue triangle.8.5 m10 m8 m3 m6 m Identify the preposition.A.butB.toC.anD.some Cuando se excita una neurona con estmulos de intensidad creciente se obtiene, a partir del umbral, la misma respuesta elctrica. En esta situacin se pone de manifiesto la caracterstica de: *A) ley del todo o nada.B) perodo refractario relativo.C) perodo refractario absoluto.D) excitabilidad.E) umbral de excitacin. WILLGIVE BRAINKISTHISTORYNEED RNBbb WILL GIVE 90 POINTS AND BRAINIEST PLEASE HELP Read the speech "Voluntourism: An Opportunity Too Good to be True" and consider the advertisement "The Opportunity of a Lifetime." Then, answer the question. Voluntourism: An Opportunity Too Good to be True A Speech to the Student Body of Evergreen High [1] Picture this: It's Spring Break, and you fly off to some country where there's lush rainforests and beautiful, blue coastlines to explore. There's also people in need, so you decide to blend your vacation with volunteering. Volunteering as a tourist, or voluntourism, seems like a great way to explore new regions and help people at the same time. However, this "volunteer plus travel" experience can actually harm local communities. While many teens might view traveling and volunteering abroad as a worthwhile adventure, there are more genuine and effective ways to make a difference. [2] Most would agree that volunteering in general is a worthy use of time. However, what if you found out the children you are "helping" are actually being kept in poor conditions so voluntourists will spend money to come to the local area? Dale Rolfe, a supporter of ethical voluntourism, explains the shocking reality that "Animal sanctuaries and orphanages are often manufactured for the voluntourist...encouraging a cycle of exploiting the very animals and children the volunteers are trying to help." [3] Proponents of the "volunteer plus travel" experience also argue that traveling to new places builds character and is a valuable way to learn about different cultures. With voluntourism, however, participants often pursue experiences that are all about them. For example, they sign up to build a school for a gold star on their resume, but they have no real building skills and take jobs away from local construction workers (Schulten). Or, they arrive to teach English but instead take selfies with the locals. One world traveler and ethical voluntourist believes voluntourism "can perpetuate small minded views of the world by taking insulated, fake, and structured experiences and selling them as unabridged and eye opening" (Carlos). The voluntour experience is a mirage. The voluntourist's eyes are not opened to real life at the destination, and lasting change is not achieved. [4] If you want a genuine experience where you can see a lasting impact, there are better options than voluntourism. You can volunteer in your local community. Give an hour every week to your town's animal rescue. Serve monthly dinners to the homeless. Be a reliable, positive influence on a child who needs a mentor. Studies show that volunteering and forming lasting relationships with those you help has a positive impact on your physical and emotional health. In fact, blood pressure is reduced, memory is improved, and rates of depression are reduced (Michaels). [5] There is another reason to look into alternatives to voluntourism. Did you know the average "voluntour" travel package costs $3,400 (Rolfe)? Could that travel money be better spent? If the world's citizens are your passion, it could go to an international organization. If you care about education, your funds can be used to buy books for students in faraway lands. If you want villagers to have clean water, contribute funds to local efforts to dig wells. If you want to experience a different culture, travel to the country as a guest, and learn from the locals how you can best help them after you've returned home. But do not voluntour. [6] In reality, there are better ways to make a difference. Voluntourism might appear to be an adventure that blends travel and helping others, but it does little except provide a costly, superficial experience that might actually do more harm than good. So, volunteer where you are most needed-at home, where you can stay to see the job through and form genuine, lasting relationships. Choose a beautiful coastline closer to home and send the travel money you saved to an international organization that will put it to good use. Whatever you do, don't turn someone else's hardship into your vacation. "The Opportunity of a Lifetime" A magazine advertisement with the title Both texts (the speech and the advertisement) address voluntourism. However, each text has a different purpose, which is reflected by the details each writer chose to include. Consider the words and images used. In a paragraph of 6-8 sentences, identify what each text emphasizes and explain how that emphasis reveals each author's position on voluntourism. Be sure to state each author's position and include evidence from both texts to support your analysis REASON 4 with support i think you should lie depending on the situation because Bert measured a swimming pool and made a scale drawing. The scale of the drawing was1 centimeter = 1 meter. What scale factor does the drawing use?Simplify your answer and write it as a fraction.Submit Cules son los principales elementos de un conflicto? Cmopodemos manejar nuestras emociones? will give brainliest !! please help giving 20 points!! Read the following passage from The Quest for Medusas Head.Where is the tooth? Where is the eye?" screamed the two, reaching out their long arms and groping here and there. "Have you dropped them, sister? Have you lost them?"Perseus laughed as he stood in the door of their cavern and saw their distress and terror.What change in perspective might the reader experience through this dialogue?A reader might be fearful for Perseus.A reader might think Baldwin changed to 1st person POV.A reader could be repulsed by Gray Sisters.A reader might pity the Gray Sisters.please dont just choose a random answer i'm gonna fail ;-;