Business, 11.06.2021 22:50 amortegaa805

Tyra loves to shop at her favorite store, Dollar Barrel, where she can find hundreds of items priced at exactly $1. Tyra has to spend and is thinking of going on a shopping spree at Dollar Barrel, but she is also thinking of investing her money. a. Suppose the expected rate of inflation is % (so next year, everything at Dollar Barrel will cost $1.01) and Tyra can earn on money that she invests. Approximately what real rate of interest could Tyra earn if she invests her money? How many items can she buy at Dollar Barrel today, and how many can she buy a year from now if she invests her money and goes shopping later? What is the percentage increase in Tyra's purchasing power if she waits a year to go shopping? Compare your answer to the approximate real interest rate on Tyra's investment.
b. Now suppose that the expected inflation rate is % and Tyra can earn % on money that she invests over the year. What is the approximate real rate of interest that Tyra will earn? Calculate the number of items that Tyra could buy next year from Dollar Barrel if she invests her money? What is the percentage increase in her purchasing power if she waits a year to go shopping? Relate your answer back to Tyra's real rate of return.

Answers: 1

Show answers

Other questions on the subject: Business

Business, 22.06.2019 06:40, lexhorton2002

Burke enterprises is considering a machine costing $30 billion that will result in initial after-tax cash savings of $3.7 billion at the end of the first year, and these savings will grow at a rate of 2 percent per year for 11 years. after 11 years, the company can sell the parts for $5 billion. burke has a target debt/equity ratio of 1.2, a beta of 1.79. you estimate that the return on the market is 7.5% and t-bills are currently yielding 2.5%. burke has two issuances of bonds outstanding. the first has 200,000 bonds trading at 98% of par, with coupons of 5%, face of $1000, and maturity of 5 years. the second has 500,000 bonds trading at par, with coupons of 7.5%, face of $1000, and maturity of 12 years. kate, the ceo, usually applies an adjustment factor to the discount rate of +2 for such highly innovative projects. should the company take on the project?

Answers: 1

continue

Business, 22.06.2019 08:30, rajenkins79

Kiona co. set up a petty cash fund for payments of small amounts. the following transactions involving the petty cash fund occurred in may (the last month of the company's fiscal year). may 1 prepared a company check for $350 to establish the petty cash fund. 15 prepared a company check to replenish the fund for the following expenditures made since may 1. a. paid $109.20 for janitorial services. b. paid $89.15 for miscellaneous expenses. c. paid postage expenses of $60.90. d. paid $80.01 to the county gazette (the local newspaper) for an advertisement. e. counted $26.84 remaining in the petty cashbox. 16 prepared a company check for $200 to increase the fund to $550. 31 the petty cashier reports that $380.27 cash remains in the fund. a company check is drawn to replenish the fund for the following expenditures made since may 15. f. paid postage expenses of $59.10. g. reimbursed the office manager for business mileage, $47.05. h. paid $48.58 to deliver merchandise to a customer, terms fob destination. 31 the company decides that the may 16 increase in the fund was too large. it reduces the fund by $50, leaving a total of $500.

Answers: 1

continue

Business, 22.06.2019 10:20, Sparkledog

Blue spruce corp. has the following transactions during august of the current year. aug. 1 issues shares of common stock to investors in exchange for $10,170. 4 pays insurance in advance for 3 months, $1,720. 16 receives $710 from clients for services rendered. 27 pays the secretary $740 salary. indicate the basic analysis and the debit-credit analysis.

Answers: 1

continue

Business, 22.06.2019 14:40, annahm3173

In the fall of 2008, aig, the largest insurance company in the world at the time, was at risk of defaulting due to the severity of the global financial crisis. as a result, the u. s. government stepped in to support aig with large capital injections and an ownership stake. how would this affect, if at all, the yield and risk premium on aig corporate debt?

Answers: 3

continue

You know the right answer?

Tyra loves to shop at her favorite store, Dollar Barrel, where she can find hundreds of items pric...