Assume that the economy has an annual inflation rate of 5 percent. Are the following investments profitable in real terms? (d) The spot price of silver is $31 per ounce. You purchase 50 ounces of silver for $1,600, in order to compensate the merchant. Over the year, the spot price of silver rises to $34 per ounce, and you are able to sell the silver you have at the spot price. (e) You purchase a Non-Fungible Token (NFT) for $98 million. The following year, you are able to sell it for $102.5 million.

Q: If inflation has been 2% each year for the past 3 years, and over that time your salary has…

A: Solution ,

Q: 5a. Consider the data in the table below. The inflation rate is 6% and the before-tax market…

A: Formula for the present value is given as: P = F(1+R)tP : present value F : Future value t : total…

Q: 23) If the CPI in 2017 was 100 and there was 3% inflation each year from 2017-2020, what would the…

A: We use the normal formula of compounding: FV = PV(1+r)ⁿ Where FV is the future value, PV is the…

Q: You deposited $10,000 today into a saving account for 5 years with a market rate of 8% per year. The…

A: To determine the future purchasing power equivalent to the present value, can use the formula for…

Q: Forty years ago, a gallon of gas cost $1.20. Today, a gallon of gas costs 2.60. Suppose that the gas…

A: The gallon gas cost $1.20, fourty years ago. The present cost of gas is $2.60. The gas price…

Q: The formula we use to calculate the inflation rate for period t is Pt/(Pt-1-1). Selected answer will…

A: The inflation rate can be measured as a rate of change in the consumer price index (CPI) over a…

Q: If the price of a good is $200 in 2015 and $204 in 2019, what is the inflation rate? A) 22% B) 20%…

A: Inflation refers to the situation of increasing price level in the economy.

Q: You are purchasing a car. Consider the following information: Retail Cost: $30,000 20% Down Payment.…

A: Present worth, also known as present value, is a financial concept used to evaluate the current…

Q: Henrique is a baseball fan and attends several games per season.  His expenses per season are listed…

A: Answer to the question is as follows:

Q: None

A: Detailed explanation:Step 1: Identify the initial and final values:…

Q: The average annual cost(tuition, fees, and room and board) at four-year private universities rose…

A: CPI (Consumer Price Index) measures the average change in prices of goods and services bought by…

Q: The federal-level Pell Grant program provides financial aid to needy college students. The grant…

A: The average inflation rate is a measurement of how quickly on average prices for goods and services…

Q: Suppose that you just purchased a used carworth $8,000 in today’s dollars. Suppose also thatyou…

A: a) rate of interest (roi) that is free of inflation (i’) is measured by applying the rule below to…

Q: Price per Unit Units Produced 2007 2008 2009 2010 Blueberries8 $2 $2 $2.1 $2.4 Pineapples $2 $2.5…

A: The inflation rate is the percentage change of a price index over time.

Q: Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with…

A: Inflation refers to the sustained increase in the general price level of goods and services in an…

Q: Find the present worth of earthmoving equipment that has a first cost today of $155,000, an annual…

A: Present value is the concept that states an amount of money today is worth more than that same…

Q: In wisely planning for your retirement, you invest $15,000 per year for 20 years into a 401K…

A: Formula for futrure value of annuity is given as: F = C * (1+i)n-1ii : nominal interest per periodn…

Q: A series of five constant dollar (or real dollar) payments beginning with $8000 at the end of the…

A: Real interest rate is calculated using the formula [(1+ i) / (1+ inflation) ] -1 = [(1+12%)/(1+5%)…

Q: 5a. Consider the data in the table below. The inflation rate is 6% and the before-tax market…

A: Actual Dollars:The cash money which is in circulation in the economy and these dollars are inflated…

Q: Suppose that you borrow $20,000 at 12%, compounded monthly, over 5 years. Knowing that the 12%…

A: Present value is the value of investment in today's dollar.Future value is the value of investment…

Q: An economist predicts that the annual inflation rate will be 7% for 4 years and 6% for the next 6…

A: Inflation is characterized as a sustained increase in the average cost of services and goods. While…

Q: Darren and Susan want to provide funding for their daughter Jerri, age 10, to attend four years of…

A: To determine the amount of life insurance needed, we need to calculate the future cost of the four…

Q: 4) When the minimum wage was first enacted in the United States in 1938, it was a whopping $0.25 per…

A: Annual inflation, refers to the percent change of the CPI compared to the same month of the previous…

Q: At beginning of year, CPI is at 100. Inflation swap buyer pays 3% for a 5 year swap with a notional…

A: Consumer Price Index (CPI): The consumer price index (CPI) could also be a measure that examines the…

Q: If the nominal interest rate is 8% and the inflation rate is 5%. Using the relevant real interest…

A: Given that,  Nominal interest rate = 8% or 0.08  Inflation rate = 5% or 0.05 Present value (PV) =…

Q: Suppose that yearly inflation for 2020, 2021 and 2022 are 20%, 25% and 20% respectively. If the…

A: CPI is the measure of the aggregate price level in the economy CPI after 3 years would be =…

Q: Provided the inflation rate is f percent per year, to determine the purchasing power of $10,000 ten…

A: The buying capacity is the amount of items which a official currency may acquire. Due to increasing,…

Q: 3. An economist has predicted that for the next 5 years, the U.S. will have a 2.5% annual inflation…

A: A Inflation rate is the percentage change in price of the goods in a specific period. It is measured…

Q: A retired couple has a fixed income of $3,500 per month. Assuming an annual inflation rate of 7%…

A: Given that, A = $3,500 r = 7% or 0.07 t = 5 years  And interest rate compounded annually  That means…