If the price index rises from 100 to 120, the purchasing power value of the dollar:

a. may either rise or fall
b. will rise by one-sixth.
c. will fall by one-sixth.
d. will rise by 20 percent.

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Michigan mattress company is considering the purchase of land and the construction of a new plant. the land, which would be bought immediately (at t = 0), has a cost of $100,000 and the building, which would be erected at the end of the first year (t = 1), would cost $500,000. it is estimated that the firm's afterminustax cash flow will increase by $100,000 starting at the end of the second year, and that this incremental flow would increase at a 10 percent rate annually over the next 10 years. what is the approximate payback period?

If a bond is issued at a premium the effective interest rate is most likely