In 1975, interest rates were 7.85% and the rate of inflation was 12.3% in the United States.

Question:

In 1975, interest rates were 7.85% and the rate of inflation was 12.3% in the United States. What was the real interest rate in 1975? How would the purchasing power of your savings have changed over the year?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

See More Books

Question Posted: Jan 14, 2012 02:23 AM

See More Questions

Li Corp purchased a container load of antiques for resale at an invoice cost of $1,300,000. The goods were paid for when they were shipped in early June. The container arrived in Canada at the end of...
We win a judgement of $200,000 now for pain and suffering. The defendant will have to pay us next year. Additionally, he will have to pay us our salaries for 5 years. The salary 2 years ago was...
In 1974, interest rates were 7.782% and the rate of inflation was 12.299% in Canada. What was the real interest rate in 1974? How would the purchasing power of your savings have changed over the year?
Suppose that we want to know the mass of gasoline in an automobile's gas tank. The tank has a volume of 70 L, and a handbook of fluid properties states that the density of gasoline is 736 kg/m. (1000...
A bank offers your firm a revolving credit arrangement for up to $75 million at an interest rate of 1.57 percent per quarter. The bank also requires you to maintain a compensating balance of 4...
Solve the equation: (x 2) 2 = 9.
Critical Thinking The majority of consumers have made a purchase online. Retailers are making it easier than ever by accepting Apple Pay, PayPal, and other payment methods that help protect your...
Sallys Software Inc. is a rapidly growing supplier of computer software to the Sarasota area. Sales for the last 5 years, 2009 to 2013, are given below. Sales Year ($ millions) 2009 .........1.1 2010...
Suppose a firm imports goods from Europe and the import price is denominated in euros, then ________. Group of answer choices the exporter bears foreign exchange risk Central Bank faces foreign...
Denver Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2011. Costs incurred for 2011 are as follows (V stands for variable; F stands for fixed): Direct...
Your firm has taken out a $500,000 loan with 9% APR (compounded monthly) for some commercial property. As is common in commercial real estate, the loan is a 5-year loan based on a 15-year...
If the rate of inflation is 5%, what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment?
Suppose the isobaric process in Figure $20.34 c$ begins and ends on the same isotherms as the isochoric process in Figure 20.30c. Which process requires a greater amount $Q$ of energy transferred...
Global Operations Management is supported by Strategic Supply Chain Management in many ways. Elucidate the following; List and briefly define/describe the Five (5) Components of Strategic Supply...
The Alpine House, Inc. is a large winter sports equipment broker. Below is an income statement for the company's ski department for a recent quarter. LA CASA ALPINA, INC. Income Statement - Ski...
Two investment portfolios are shown. Investment Portfolio 1 Portfolio 2 ROR Savings Account $1,425 $4,500 2.80% Government Bond $1,380 $3,600 1.55% Preferred Stock $3,400 $2,150 11.70% Common Stock...
The following information pertains to JAE Corporation at January 1, Year 1: Common stock, $8 par, 11,000 shares authorized, 2,200 shares issued and outstanding Paid-in capital in excess of par,...
Group dynamics are important elements within the leading facet of the P-O-L-C framework. Discuss a time in your professional, school, or personal life when you experienced the Five Stages of Group...
How do you think including its suppliers on the team helps a company meet or exceed its customers expectations?
D Which of the following is considered part of the Controlling activity of managerial accounting? O Choosing to purchase raw materials from one supplier versus another O Choosing the allocation base...
A technician carries out the reaction 2 SO 2 (g) + O 2 (g) 2 SO 3 (g) at 25C and 1.00 atm in a cylinder fitted with a piston and maintained at constant pressure. Initially, 0.030 mol SO 2 and 0.030...
Summit Systems will pay a dividend of $1.50 this year. If you expect Summits dividend to grow by 6% per year, what is its price per share if the firms equity cost of capital is 11%?
Dorpac Corporation has a dividend yield of 1.5%. Its equity cost of capital is 8%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpacs dividends?...
Colgate-Palmolive Company has just paid an annual dividend of $0.96. Analysts are predicting an 11% per year growth rate in earnings over the next five years. After then, Colgates earnings are...
Your company BMG Inc. has to liquidate some equipment that is being replaced. The originally cost of the equipment is $120,000. The firm has deprecated 65% of the original cost. The salvage value of...
1. What are the steps that the company has to do in time of merger transaction? And What are the obstacle that may lead to merger failure? 2.What are the Exceptions to not to consolidate the...
Problem 12-22 Net Present Value Analysis [LO12-2] The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation currently is done...

In 1975, interest rates were 7.85% and the rate of inflation was 12.3% in the United States.

Question:

Step by Step Answer:

In 1975 interest rates were 785 and the rate of inflation was 123 in the United States Wha...View the full answer

Fundamentals of Corporate Finance

Students also viewed these Corporate Finance questions