Annual expenses for two alternatives have been estimated on different bases as follows: If the average general price inflation rate is expected to be 4% per year and the real rate of interest is 8% per year, show which alternative has the least negative equivalent worth in the base period? Alternative A Alternative B Annual Expenses Annual Expenses Estimated in Real End of Estimated in Year Actual Dollars Dollars with b = 0 $120,000 132,000 s100,000 2 110,000 120,000 3 148,000 4 160,000 130,000

Annual expenses for two alternatives have been estimated on different bases as follows: If the average general price inflation rate is expected to be 4% per year and the real rate of interest is 8% per year, show which alternative has the least negative equivalent worth in the base period? Alternative A Alternative B Annual Expenses Annual Expenses Estimated in Real End of Estimated in Year Actual Dollars Dollars with b = 0 $120,000 132,000 s100,000 2 110,000 120,000 3 148,000 4 160,000 130,000

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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The inflation rates for 4 years are forecast to be 3%, 3%, 4%, and 5%. The interest rate exclusive of inflation is anticipated to be 6%, 5%, 4%, and 5% over this same period. If labor is projected to be $1,000, $1,500, $2,000, and $1,000 in then-current dollars, during those years, determine the present worth equivalent for labor cost.
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Using below information: Current spot rate CAD1 = USD 0.95 Annual interest rate in Canada: 2% Annual interest rate in US: 6% Applying International Fishier Effect theory, what should be the expected future spot rate for CAD? Use 4 numbers after decimal point.
Current spot rate of CAD = $0.800. Interest rate in the U.S. = 7.0%. Interest rate in the Canada = 5.00%. If the 1-year current forward rate for CD is $0.820, your covered rate of return will be: ○ 9.675% 2.439% ○ 7.625% ○ 4.390%
Based on the table below, the 2-year implied spot rate is closest to: Forward rate 1 year forward rate at time zero (1f0) 1 year forward rate 1 year from now (1f1) 1 year forward rate 2 year from now (1f2) 1 year forward rate 3 year from now (1f3) 1 year forward rate 4 year from now (1f4) Value 0.80% 1.12% 3.94% 3.28% 3.14% All rates are annual rates stated for a periodicity of one (effective annual rates). ○ 1.93% 0.96% ○ 1.31%
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:1R1 = 2.62%, E(2r1) = 3.90%, E(3r1) = 4.40%, E(4r1) = 5.90%Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Let’s assume that the real rate of return is a constant 20%. If inflation is 50%, then the nominal rate of return is 80% (because (1+0.50)*(1+0.20) = 1.80). Therefore, you get $180 over a one year period for a $100 investment. Assuming income taxes to the tune of 40%, compute the real value of your investment (after taxes on nominal income have been paid) at the end of the year. Now contrast the same scenario but without any inflation, what would the value of your investment be at the end of the year. What lesson can we learn comparing these two scenarios? Answer must be correct.Show all calculation step by step.Don,t miss any point.
Answer ASAP please write the formula used please.
Computing Present Value of Single Amount under Different Assumptions Consider the following four separate investment scenarios. Compute the present value under each of the four separate investment options. Note: Round final answer to the nearest whole dollar. Note: Do not use a negative sign (-) with your answers. Future Annual Investment Investment Amount Compounding Interest Rate Period (Years) Investment A $50,000 Annually 5% Semiannually 6% Quarterly 8% Monthly 12% Investment B 250,000 Investment C 300,000 Investment D 400.000 10 10 $ A A Present Value
Choose option a,b,c,d,e for the following: Question 7 - Imagine two currencies: X and Y. If it takes more units of X to buy Y 90 days forward: a. Then X will have depreciated over the 90 day period. b. Then Y would be devalued over the 90 day period. c. Then X would be devalued over the 90 day period. d. Then Y would have appreciated over the 90 day period. e. No option is correct.
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions? Question content area bottom Part 1 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax rate of return is 1.711.71%. (Round to two decimal places.) Part 2 Assuming a 1-year, money market account investment at 2.282.28% (APY), a 2525% marginal tax bracket, and a constant $ 50 comma 000$50,000 balance, the after-tax monetary return is $855855. (Round to the nearest dollar.) Part 3 Given an after-tax return of 1.711.71% and an inflation rate of 1.391.39%, the after-tax real rate…