Tamika is lending Juan $1,000 for one year. The CPI is 1.60 at the time theloan is made, and they both expect it to be 1.68 in one year. If Tamika andJuan agree that Tamika should earn a 3 percent real return for the year,the nominal interest rate on this loan should bepercent.

The interest rate is the fee of borrowing cash or the go back on investment expressed as a percent…

Tamika is lending Juan $1,000 for one year. The CPI is 1.60 at the time the loan is made, and they both expect it to be 1.68 in one year. If Juan agree that Tamika should earn a 3 percent real return the nominal interest rate on this loan should be and year, for the Tamika percent.

Tamika is lending Juan $1,000 for one year. The CPI is 1.60 at the time the loan is made, and they both expect it to be 1.68 in one year. If Juan agree that Tamika should earn a 3 percent real return the nominal interest rate on this loan should be and year, for the Tamika percent.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 7E

See similar textbooks

Similar questions

Help
30
Using the table below, find the real value of a payment of $2,500 to be recelved each year given the following CPI values. Next find the amount that this $2,500 should be adjusted to in order to keep its real value at $2,500. Instructions: Round your answers to two decimal places. Cost-of-living adjusted payment BUL 2,500 I Real value of Year CPI $2,500 2015 T 100 2016 103 | 2017 105 2018 110
On January 1, 2011, Maria invested $1,000 at 6 percent interest per year for three years (with yearly capitalization). The CPI stood at 100 in January 1, 2011. At year later it climbed to 105 and on January 1, 2013 was 110, and on January 1, 2014, the day Marias investment matured, the CPI was at 120. Find the real interest rate that Maria's total real return over the 3-year period. (Write your answer without the %. If your answer is XX.yy%, write XX.y, only two decimal points.)
Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $4,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a football ticket has a price of $10.00. Initially, Dalia's $4,000 deposit has a purchasing power of football tickets. For each of the annual inflation rates given in the following table, first determine the new price of a football ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dalla's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest football ticket. For example, if you find that the deposit will cover 20.7 football tickets, you would round the purchasing power down to 20 football…
Using the table below, find the real value of a payment of $2.200 to be received each year given the following CPI values: Next find the amount that this $2,200 should be adjusted to in order to keep its real value at $2,200. Instructions: Round your answers to two decimal places. Real value of Cost-of-living adjusted payment 2,200 66 O Year CPI $2,200 2015 100 2,200 2016 103 2135.92 O 2017 105 2095.24 O 110 110 2000 220 2018
Sally worked hard all year and put her savings into a mutual fund that paid a nominal interest rate of 6 percent a year. During the year, the CPI increased from 175 to 182 . What was the real interest rate that Sally earned? Sally earned a real interest rate of enter your response here percent per year. >>> Answer to 1 decimal place. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.
Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $2,000 into a savings account that pays an annual nominal interest rate of 20%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a football ticket has a price of $20.00. Initially, Dalia's $2,000 deposit has a purchasing power of football tickets. For each of the annual inflation rates given in the following table, first determine the new price of a football ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dalia's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest football ticket. For example, if you find that the deposit will cover 20.7 football tickets, you would round the purchasing power down to 20 football…
Frank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a real return of 4 percent per year. Instructions: Enter your responses as whole numbers. a. The CPI (times 100) is 100 at the time that Frank makes the loan. It is expected to be 105 in one year and 110.2 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be
10
Please help solve
You borrow $50,000 today at a rate of 5%. Today, inflation instantly rises to 7% and stays that way for the duration of your loan. Based on the above information today O you will pay the lender back exactly $55,500. O you will pay the lender back exactly $60,700. the real rate of interest on your loan is 10% the real rate of interest on your loan is -2% O the real rate of interest on your loan is 2%