The XYZ Corporation Determines It Can Make a Real (Inflation-Adjusted)return

question 182

Multiple Choice

The XYZ Corporation determines it can make a real (inflation-adjusted) return on an investment of 9 percent. The nominal rate of interest is 13 percent and the rate of inflation is 7 percent. We can conclude that the

• A)investment will be profitable.
• B)investment will be unprofitable.
• C)real rate of interest is 4 percent.
• D)real rate of interest is 2 percent.

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Definitions:

Amortization Table

A listing of the unpaid principal, the monthly payment, the amount allocated to paying down the principal, and the amount allocated to interest.

Spreadsheet

A digital document composed of rows and columns that helps in organizing, analyzing, and storing data, often used for financial calculations.

Formula

A mathematical relationship or rule expressed in symbols.

Lessee

A person or entity that leases or rents property from another; the counterpart to the lessor.