Sam saved $5,000 from his income last year and decided to deposit it at a bank in a saving account. At the end of the year, his deposit account balance reached a total value of $5,200. During the year, the consumer price index rose from 250 to 265. a. Calculate Sam's nominal interest rate. Show your work. b. Calculate Sam's real interest rate. Show your work. Explain whether Sam experienced an increase or decrease in the purchasing power of his saving over the year.
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- 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 109 in one year and 118.8 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be %. b. Suppose Frank and Sarah are unsure about what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 4 percent rate of return? Frank should charge Sarah % (Click to select) more than equal to less than the inflation rate.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 beFrank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a real return of 3 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 111 in one year and 123.2 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be b. Suppose Frank and Sarah are unsure about what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 3 percent rate of return? Frank should charge Sarah %. ✓ (Click to select) e inflation rate. equal to more than less than
- This person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. Consumption Next Year The interest rate is 10%. Consumption Today Moving from C to A the person is saving money and earning interest. O Moving from A to C, the person is borrowing and paying interest. O Moving from C to B, the person is saving and earning interest. O Moving from C to B, the person is borrowing and paying interest.Barbara Jones left a $25,000 job as an architect to run a catering business. She invested $100,000 of her own money to purchase a building for the business. The interest rate that Barbara typically earns on her investments is 10 percent, while real estate is not appreciating in Barbara’s neighborhood. Barbara spends $150,000 per year on salaries, supplies, ect.. During the first year, her business had $200,000 in revenues. Barbara’s accounting cost during the first year is __________________, her economic cost is _____________, she earned _______________in accounting profit, and __________________in economic profit. a) $160,000; $125,000; $40,000; -$85,000 b) $150,000; $185,000; $50,000; $15,000 c) $150,000; $125,000; 50,000; $75,000 d) $175,000; $125,000; $25,000; $75,000After grauating with a BBA in Economics, Dwight is considering going to college to get a Ph. D. in Economics. If he does not go to graduate school to get a Ph. D. in Economics, he will be earning $112483 working at Bank of America, and spend $44134 on room and board. If he goes to college to get a Ph. D. in Economics, he will spend $43012 on tuition, $20376 on room and board, and $7550 on books. What are Dwight's full cost of getting a Ph. D. in Economics? Only typing answer Please explain step by step
- Frank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a 2 percent real return per year. Instructions: Enter your responses as as whole numbers. a. The CPI (times 100) is 100 at the time that Frank makes the loan. It is expected to be 110 in one year and 121 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be %. b. Suppose Frank and Sarah are unsure what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 2 percent real rate of return. Frank should charge Sarah) % (Click to select) the inflation rate.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…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…
- . Discuss how the present value of a future income payment is calculated.Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $3,000 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 $15.00. Initially, Dalia's $3,000 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…Calculate the value of income if consumption is $2000 and savings is $1200