Question
Can't seem to get the correct answers on these problems. Please show your work! 1) The bank is paying 10.04% compounded annually. The inflation is
Can't seem to get the correct answers on these problems. Please show your work!
1) The bank is paying 10.04% compounded annually. The inflation is expected to be 5.39% per year.
What is the market interest rate?
2) You are paying a series of five constant-dollar (or real-dollar) uniform payments of $1977.3 beginning at the end of first year. Assume that the general inflation rate is 29.08% and the market interest rate is 29.08% during this inflationary period. The equivalent present worth of the project is:
Hint:
- Read the question carefully.
- What type of dollar that was given in the question?
- With the given dollar, what type of interest rate do you need to use?
3) Five years ago you invested $15275 at a 5% market interest rate.
If the inflation rate is 4%, what is the current constant dollar value of your investment?
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