Need ans general Accounting A nation has zero public debt in year 1. It then experiences the following budgetsituations:•Year 2: Budget deficit of $75 billionYear 3: Budget deficit of $45 billionYear 4: Budget surplus of $20 billionYear 5: Budget deficit of $15 billiona. Calculate the absolute size of its public debt in year 5.b. If its real GDP in year 5 is $230 billion, what is the country's public debt as apercentage of real GDP?

Step 1: Define Public DebtPublic Debt refers to the total amount of money that a government owes due…

Answered: A nation has zero public debt in year…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Treasure bills (T-bills) are used by the U.S. Treasury Department to finance the public debt. Suppose a 180-day T-bill with a maturity value of $10,000 is purchased for $9,885.56. What annual simple interest rate is earned on this T-bill? (Answer as a percentage rounded to three decimal places.) I = PRT, A = P+I
In 2018, the nominal interest rate on bonds was 5 percent a year and the real interest rate was 2 percent a year. Investment was 2.7$ trillion and the government budget deficit was 0.5$ trillion. By 2020, the real interest rate had increased to 5 percent a year, but the nominal interest rate increased to 4 percent a year. Investment has crashed to 1.8$ trillion and the government budget deficit had climbed to 3.8$ trillion. Assume that the private demand for and private supply of loanable funds did not change between 2018 & 2020. What was the inflation rate in 2018 and 2020? What happened to the price of bond between 2018 and 2020? Did the change in the government budget deficit crowed out some investment? What happened to the demand for loanable funds between 2005 and 2009? How do you know? What happened to the quantity of saving and investment?
If national income Y = 10,500, disposable income Yd = 8,500 , consumption is C = 8,000, transfer payments TR = 150 and the budget deficit is BD = 200, what is the level of private domestic investment, I ? (please insert the round number without the Euro symbol)
What are the structural deficit and the cyclical deficit?
Suppose that the assets of a bank consist of $200 million of retail loans (not mortgages). The PD is 1% and the LGD is 70%. What is the risk-weighted assets under the Basel II IRB approach? What are the Tier 1 and Tier 2 capital requirements?
The chapter demonstrated that a firm borrowing in a foreign currency could potentially end up paying a very different effective rate of interest than what it expected. Using the same baseline values of a debt principal of SF1.5 million, a one year period, an initial spot rate of SF1.5000/$, a 5.000% cost of debt, and a 34% tax rate, what is the effective cost of debt for one year for a U.S. dollar-based company if the exchange rate at the end of the period was: a. SF1.5000/$ b. SF1.4400/$ c. SF1.3860/$ d. SF1.6240/%
1
Explanation
Answer
Suppose that the Federal Reserve System set the required reserve ratio equal to 0.1 and that the banking system holds $50 billion in excess reserves. If the amount of deposits is $1000 billion and the amount of currency holdings is $60 billion, then the currency ratio is. (Round your response to the nearest two decimal place.) Referring to part a, the excess reserve ratio is. (Round your response to the nearest two decimal place.)
Suppose that the assets of a bank consist of $100 million of loans of BBB-rated corporations. The PD for the corporations is estimated as 1%. The average maturity is five years and the LGD is 60%. What is the total risk-weighted assets for credit risk under the Basel II advanced IRB approach? Question 5Answer a. $178.1 million b. $13.2 million c. $165.4 million d. $100 million
1. An overview of a firm's cost of debt The is the interest rate that a firm pays on any new debt financing. Cold Goose Metal Works (CGMW) can borrow funds at an interest rate of 7.30% for a period of five years. Its marginal federal-plus-state tax rate is 35%. CGMW's after-tax cost of debt is (rounded to two decimal places). At the present time, Cold Goose Metal Works (CGMW) has a series of twenty-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,181.96 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 35%. If CGMW wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? O8.04% O 8.39% O 5.59% O 6.99%

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