What is the present value of the proceeds from the bond? (Do not round intermedi
ID: 2651904 • Letter: W
Question
What is the present value of the proceeds from the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
If the inflation rate over the next few years is expected to be 2.6%, what will the real value of the $100 payoff be in terms of today’s dollars? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
What is the real interest rate? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Show that the real payoff from the bond [from part (b)] discounted at the real interest rate [from part (c)] gives the same present value for the bond as you found in part (a). (Do not round intermediate calculations. Round your answer to 2 decimal places.)
You will receive $100 from a savings bond in 4 years. The nominal interest rate is 7.6%. (Can you please explain the steps)Explanation / Answer
Answer:a $100*3.342=334.18
Answer:b $100*3.752929=375.2929
Answer:c Real interest rate = Nominal interest rate - Inflation rate
=7.6%-2.6%=5%
Answer:d 375.2929-334.18=41.11
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