ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.17 : In the engineering calcul

ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.17 : In the engineering calculations of interest rate caused by inflation, General Inflation Effect and Fisher Effect may be considered. Let I = inflation rate, R = nominal interest rate, r = real interest rate. According to Fisher Effect, (1 + R) = (1 + r) (1 + I). According to General Inflation Effect, r = R - I. (a) If I = 0.1 for all effects, both the values of R and r in the Fisher Effect are the same as R and r in the General Inflation Effect, find the values of R and r. (b) If R has the same value caused by both General Inflation Effect and Fisher Effect, find the possible values of R, r and I in term of R etc.

Question Posted / kangchuentat

1 Answers
1927 Views
I also Faced
E-Mail Answers

ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.17 : In the engineering calculations of interest r..

Answer / kangchuentat

ACCOUNTING AND FINANCIAL ENGINEERING - ANSWER 34.17 : (a) For Fisher Effect, 1 + R = 1.1 (1 + r) = 1.1 + 1.1 r, 0.1 = R - 1.1 r (Equation 1). For General Inflation Effect, r = R - 0.1, 0.1 = R - r (Equation 2). Equation 2 - Equation 1 : r = 0, then R = 0.1. (b) (1 + R) = (1 + r) (1 + I) = 1 + I + r + rI, then R = (I + r) + rI (Equation 3). Let R = I + r (Equation 4). Equation 3 - Equation 4 : 0 = Ir, where (I = 0) or (r = 0) or (I = 0 and r = 0). If I = 0, r = R. If r = 0, I = R. If I = 0 and r = 0, R = 0 = 0 R = 1 R. The answer is given by Kang Chuen Tat; PO Box 6263, Dandenong, Victoria VIC 3175, Australia; SMS +61405421706; chuentat@hotmail.com; http://kangchuentat.wordpress.com.

Is This Answer Correct ?

0 Yes

0 No

Post New Answer

More Chemical Engineering Interview Questions

Explain the advantages of using a ball mill over other conventional methods of crushing?

0 Answers

why relative humidity is different in different places

3 Answers

Explain why is post-weld heat treatment (stress relieving) sometimes necessary for welded vessels?

0 Answers

In gas and water who's density is greater and why?

5 Answers

What are the three classes of organic solvents?

0 Answers

In a screw compressor air is sucked from atm and mixes with the oil and is separated using separators.Will the viscosity of the oil get affected as moisture in air gets mixed with oil?

1 Answers

Explain the significance of the angle of repose holds in the chemical industry?

0 Answers

QUANTUM BIOLOGY - EXAMPLE 33.1 : In quantum biology, conditional entropy is given by H (S | O) = H (SO) - H (O). With reference to such equation, find another equation for H (SA).

1 Answers

I want to need previous placement questions of Jindal

1 Answers Jindal, Jindal Steel and Power,

How can separation of chiral chemicals affect the chemical and/or pharmaceutical industries?

0 Answers

testing formula for oxygen by ammonium chloride,ammonium hydroxide and copper

0 Answers

What is the definition of 'good' cooling tower water?

0 Answers

For more Chemical Engineering Interview Questions Click Here