Your pension is $8,000 per month when you the next year, inflation is 1%. If your pension is indexed to inflation, what is the nominal value of your monthly pension after this second year, in dollars?
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- Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions. In Year 1 the CPI was 100; 25 years later, it was 225. What was the annual rate of inflation? Round your answer to the nearest whole number. % Nancy and Pam both currently earn $110,000. If the annual rate of inflation is 4 percent, how much must each earn after eleven years to maintain their purchasing power? Round your answer to the nearest dollar.$ Your parents bought a home for $50,000 in Year 1 and sold it in Year 31 for $280,000. What was the annual rate of price increase over the 30 years? Round your answer to the nearest whole number. %QUESTION 4 If you deposit $10,000 in a bank account that pays a 5% interest compounded monthly for threeyears, what would be your economic loss if the general inflation rate is 6% during that period? when the general inflation rate %. (Round to three decimal places.) You will lose $ 549 a. The effective annual interest rate for the deposit is 5.116 is 6%. (Round to the nearest dollar.)What are the benefits of inflation indexation in fixed income products? Why is it important for retirees? What is the cost for having inflation indexation as a product feature?
- Over the last 10 years, the average rate of inflation has been 1.51%. What is thepurchasing power of a dollar today in terms of what a dollar could purchase in 2012?Suppose, you are planning to put away $20,000 of your savings for one year. You have the following options: 1.) Buy an indexed savings bond that earns 6.50% interest rate for the next year or, 2.) Buy a non-indexed savings bond that earns 11.00% interest rate for the next year. The inflation rate for the next year is expected to be 4.50%. Which option will you choose for the next year? OA. The non-indexed bond should be chosen as it pays a higher rate of interest. OB. The rate of inflation should not play a role in making this decision. OC. It does not matter whether the indexed or the non-indexed bonds are chosen, since they pay the same real rate of interest. D. The indexed bond option should be chosen as it protects from inflation.A. California has 11.1 million employed people, 6.2 million unemployed people and 7 million people not in the labor force. Compute the labor force, unemployment rate adult population, and labor force participation rate. B. You deposit $1,000 in a bank account that pays a fixed interest rate of 5% per year and it compounds annually. What will your bank account balance be in 50 years?
- Suppose you are about to borrow $16,000 for four years to buy a new car. Which of these situations would be preferred? OA. The interest rate on the loan is 15%, and the annual inflation rate over the next four years is expected to average 5%. OB. The interest rate on the loan is 9%, and the annual inflation rate over the next four years is expected to average 3%.If inflation rate is 1% and nominal interest rate is 2.1% What will be the real interest rateThe effective interest rate on a mortgage with monthly payments is 9.38%. What is the monthly interest rate on the mortgage? What is the nominal interest rate?
- Sam bought a rental property for 500,000 five years ago. He sold the property this year for $2,200,000 and spent $343,335 fixing it up before selling the property. If the inflation rate for the past 5 years has been steady at 5% annually. a. What is the actual interest rate of this investment? b. What is the real interest rate Sam earned?Suppose the annual nominal interest rate is 7 percent and the inflation rate is 7 percent. If you deposit $1,000 in an interest-bearing checking account, at the end of the year: Multiple Choice your purchasing power will have decreased. your purchasing power will have increased. your savings will have a nominal decrease your purchasing power will have stayed the same.Suppose you have $200,000 in a bank term account. You earn 5% interest perannum from this account.You anticipate that the inflation rate will be 4% during the year. However, theactual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have andexamine the effects of inflation in