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The bank is paying 11.42% compounded annually. The inflation is expected to be 5.67% per year.
What is the market interest rate?
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Solved in 3 steps
- The bank is paying 11.26% compounded annually. The inflation is expected to be 17.56% per year. What is the inflation rate?Suppose you start saving for retirement when you are 45 years old. You invest $5,000 the first year and increase this amount by 3% each year to match inflation for a total of 20 years. The interest rate is 10% per year. How much money will you have saved when you are 65 years old?If the inflation rate is 4.95% compounded annually, how long will it take for prices to double? years
- Maria invested 20,000 Pesos in a savings account 10 years later she withdrew all her savings amounting to 44,392.80 Pesos. What was the monthly nominal interest rate of the account? * 8% 5% 10% 12%If P10k is lend today at 12% compounded annually is to be repaid in one lump sum at the end of 5 years, and if the rate of inflation is 7.5%, what is the real rate of return?You borrow $5000 from a family member and agree to pay it back in 5 months. Because you are part of the family, you are only being charged an interest at the rate of 0.5% per month. How much will you owe after 6 months? How much is the interest? What is the effective interest rate? What is the corresponding nominal rate?
- Trevor's starting salary at his new job is $40,000. His company gives a performance raise of 5% each year. If Trevor continues in the same position and always receives the performance raise, in how many years will he double his salary?Joe just completed his engineering degree and started to work for an engineering firm. Joe wants to retire early after 30 years working. He plans to invest $5,000 at the end of every year for a 30-year career. If Joe needs $3,954,750 (about $1,400,000 in today's dollars accounting for an expected 3.5% inflation rate) in savings at retirement, what interest rate must the investment earn?1. Sally Johnson loaned a friend $10,000 at 15% interest, compounded annually. The loan will be paid in four equal end-of-year payments. Sally expects the inflation rate to be 3%. After taking inflation into account, what rate of return is Sally receiving on the loan? Compute your answer to the nearest 0.1%.
- A couple decided that for every child that will be born they will place a deposit in the bank so that the child's 18th birthday he will received an amount of P 300,000. If they deposit today an amount of P 15,249.13, what is the bank's nominal rate annually?The effective interest rate is 9.38%. If interest is compounded monthly, what is the nominal interest rate?why do we use the same value in step three for the remaining 15 years , instead of finding the new value with 3% increase after that