Answer:
Depletion
Explanation:
The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called Depletion
Solution :
Given :
The bonds offer a of 4.5% per year
Tax rate = 10% = 0.10
Inflation rate = 2
= +
= 2 + 4.5
= 6.5
=
=
= 5.85
After tax real interest rate = -
= 5.85 - 2.0
= 3.85
= 7.0
= +
= 7 + 4.5
= 11.5
=
= 10.35
= 11.5 x (1 - 0.10)
= 11.5 x 0.90
= 10.35
= -
= 10.35 - 7.0
= 3.35
Putting all the value in table :
Real interest Nominal interest After tax nominal After tax
rate rate interest rate interest rate
2.0 4.5 6.5 5.85 3.85
7.0 4.5 11.5 10.35 3.35
Comparing with the , a will increase the after after tax real interest rate when the government taxes nominal interest income. This tends to encourage saving, thereby increase the quantity of investment in the economy and the increase the economy's long-run growth rate.
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Answer:
PV= $8,447
Explanation:
Giving the following information:
Future value= $13,000
Number of months= 9*12= 108
Interest rate= 0.4/100= 0.004 compounded montlhy
To calculate the initial investment required, we need to use the following formula:
PV= FV/(1+i)^n
PV= 13,000/(1.004^108)
PV= $8,447