Topic :: Inflation
what is inflationWhat is Inflation? How can we calucalate inflation? and what is the present rate of Inflation?
1 3128what is mean inflation? what is mean fiscal policy? what is mean monetary policy? what is mean gdp?
3 5843Assume that the real risk-free rate is 3% and that inflation is expected to be 8% on year 1,5% in year 2,and 4% thereafter.Assume also that all Treasury bonds are highly liquid and free of default risk. If 2-year and 5-year Treasury bonds both yield 10%,calculate the difference in the maturity risk premium on the two bonds.
1719ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.13 : (i) In the Present Value Multiplication Rule, let PV = present value, Ra = interest rate for first discount, A = duration for first discount; Rc = interest rate for second discount, C = duration for second discount. Let PV = [ 1 / (1 + Ra) ^ A ] [ 1 / (1 + Rc) ^ C ] where ^ is the symbol of power : 3 ^ 2 = 3 x 3, 2 ^ 3 = 2 x 2 x 2. (a) For discounts involving 8 % / year for 3 years and 10 % / year for 9 years, find the value of PV. (b) If Re = interest rate for third discount, E = duration of third discount, form a mathematical equation of PV as a function of A, C, E, Ra, Rc, Re. Note : Discounts are available in the purchase of certain biochemical engineering instruments. (ii) Let R = nominal interest rate related to growth rate of money, r = real interest rate related to growth rate of purchase power. If I = inflation, where the unit of R, r and I is %, find the mathematical relatonship of r as a function of R and I.
1 1358ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.13 (CORRECTION) : (i) In the Present Value Multiplication Rule, let PV = present value, Ra = interest rate for first discount, A = duration for first discount; Rc = interest rate for second discount, C = duration for second discount. Let PV = [ 1 / (1 + Ra) ^ A ] [ 1 / (1 + Rc) ^ C ] where ^ is the symbol of power : 3 ^ 2 = 3 x 3, 2 ^ 3 = 2 x 2 x 2. (a) For discounts involving 8 % / year for 3 years and 10 % / year for 9 years, find the value of PV. (b) If Re = interest rate for third discount, E = duration of third discount, form a mathematical equation of PV as a function of A, C, E, Ra, Rc, Re. Note : Discounts are available in the purchase of certain biochemical engineering instruments. (ii) Let R = nominal interest rate related to growth rate of money, r = real interest rate related to growth rate of purchase power. If I = inflation, where the unit of R, r and I is %, find the mathematical relationship of r as a function of R and I.
1 1223ACCOUNTING 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.
1 1299
Read the case given below and answer the questions given at the end. Krutika Designers Ltd is an Indian company engaged in designing shirts for an international shirt manufacturer. Its operations are currently restricted to designing shirts for the Indian market. The firm is interested in extending its operations to the European markets, but is restricted by its lack of knowledge about the latest fashions and trends prevailing there. Hence, the firm has decided to open an office in Finland for establishing a network in Europe that will give the firm access to the needed information. The firm feels that its does not have the capability of sustaining itself in the foreign markets in the long-term, and will be able to generate additional revenue from these activities only for the next 5 years. After that, the Finnish office will have to be closed down. The firm anticipates an initial investment of Rs.14 million. The project is expected to generate the following cash flows over the 5 years period. Year Cash flow (Finnish Marks) 1 2 3 4 5 10,00,000 20,00,000 50,00,000 50,00,000 30,00,000 These cash flows are expressed in terms of today’s money. The firm can claim depreciation in India according to the Straight Line Method. The salvage value from the project is expected to be nil. The Finnish Government does not provide any incentives for foreign investments. However, currently it is making an attempt to have better economic ties with India. Hence, it has decided to extend a loan of 50,000 marks to Krutika Designers. The loan will be at a concessional interest rate of 7%. The loan is to be repaid in 5 equal annual installments which will include the interest payments. The project will generate additional borrowing capacity of Rs.5 million for the firm. However, as the firm does not have any firm contract with the international shirt manufacturer, its domestic revenues are expected to be very volatile. Therefore, there is no surely that the firm will be able to absorb the tax benefits arising out of depreciation and additional borrowing capacity. The firm does not intend to indulge in any illegal money transfers. The current spot rate for the Finnish Mark is Rs.7.25/FM. The inflation rates in India and Finland for the next 5 years are expected to be 8% and 3% respectively. The exchange rate is expected to move in tandem with the inflation rates. Indian tax rate is 35% while Finnish tax rate is 40%. India and Finland have entered into a tax treaty whereby the earnings of the residents of one country are taxable in that country only. In India, the nominal risk-free interest rate is 11%. The same is 6% in Finland. The Indian nominal interest rate (including risk-premium) is 15%, while that in Finland is 9%. The nominal all-equity rate in India is 18%. 1. Comment on the financial viability of the project. 2. What are the different circumstances in which nominal all-equity discount rate and real all equity discount rate should be used for discounting the cash flows? Explain the rationale behind it. 3. Comment on the financial viability of the project if the firm is sure about being able to absorb the tax benefits arising out of depreciation and increased borrowing capacity. 4. Explain the concept of exchange risk and how it affects an international project. 5. How can the financial structure of a project be used to overcome repatriation restrictions? What are the additional benefits of such maneuvers?
what is current inflation and crr,repo rates andbank interest rate
how can i make configration relation with inflation in sap
how can i make transaction related to inflation account in sap ?
explain inflation ,deprication ,time of value & pf tariff
how inflation rate is calculated in pakistan?
examine the role of money,as a significant motivator,in the present inflationary conditions.
Can anybody give the ans for this questions it will be helpful for the interview, what are the challanges for banks in future as how to compete with public banks? how to fight with inflation? how to maintain the eco. growth in respect of SEBI & RBI regulations?.
hi...i m pinkee, persuing graduation in biotechnology and i am selected for sbi clerical interview. please send me questions that can be asked in interview........... and also send answers of question given below.. internet banking what is a company? advantages of nationalisation of banks what is inflation? bussiness undertaken by banks bank interdetness introduction of technology in banks
How Government calculate Inflation Rate
How CRR(What is CRRrate hike will help to reduce inflation rate
Discuss briefly the causes and consequences of ‘inflation’ in an economy like India.
hii,i was appeared in recruitment process of Catholic Syrian Bank.Interview question were general banking related... as what is crr,calling rate, current inflationrate etc
what are the charecteristics of cost accounting financial accounting managment accounting payroll accounting environmental accounting h r accounting forensic accounting inflation accounting?
During periods of Inflation, tax rates should increase.why?
