If a country's real interest rate is 3% and its inflation rate is 1%, what is the nominal risk-free ratefor a T-Bill?3%1%2%4% In the early 1600's, Native Americans and colonists traded corn. Through bartering, a colonistagrees to pay 3 bushels of corn after the harvest in return for 1 bushel of corn before the harvestThe colonists revealedO an MRS of 3 and a rate of time preference of 2O an MRS of 3 and a rate of time preference of 1O an MRS of 3 and a rate of time preference of 3an MRS of 1 and a rate of time preference of 1

T-bills also known as treasury bills. T- bills are government bonds or debt securities which are…

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what is the nominal risk-free rate

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 18P

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In 1626, Dutchman Peter Minuit purchased Manhattan Island from a local Native American tribe. Historians estimate that the price he paid for the island was about $24 worth of goods, including beads, trinkets, cloth, kettles, and axe heads. Many people find it laughable that Manhattan Island would be sold for $24, but you need to consider the future value (FV) of that price in more current times. If the $24 purchase price could have been invested at a 5.75% annual interest rate, what is its value as of 2018 (392 years later)?
Galicia, a A5 Wagyu supplier, sold 100 40x2 containers of A5 Wagyu to Andalusia who promised to pay once he has sold all the wagyu. Andalusia meantime delivered the goods to Balearic, a warehouseman, who issued a warehouse receipt. Without the knowledge of Galicia and Balearic, Andalusia negotiated the receipt to Basque who acquired it in good faith and for value. Basque then claimed the goods from Balearic, who released them. After the wagyu were loaded on a ship bound for Manila, Galicia invokes his right to stop the goods in transit due to his unpaid lien. Who has a better right to the rice? a. Basque, since he has superior rights as a purchaser for value and in good faith. b. Basque, regardless of whether or not he is a purchaser for value and in good faith. c. Galicia, since as an unpaid seller, he has the right of stoppage in transitu. d. Balearic, since it appears that the warehouse charges have not been paid.
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In 1880 five aboriginal trackers were each promised the equivalent of 100Australian dollars for helping to capture the notorious outlaw Ned Kelley. In2001 the granddaughters of two of the trackers claimed that this reward hadnot been paid. The Victorian prime minister stated that if this was true, thegovernment would be happy to pay the $100. However, the granddaughtersalso claimed that they were entitled to compound interest. a. How much was each granddaughter entitled to if the interest rate was3%? (Do not round intermediate calculations. Round your answer to 2decimal places.) b. How much was each entitled to if the interest rate was 6%? (Do not roundintermediate calculations. Round your answer to 2 decimal places.)
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Talbot purchases business machinery for a price of $100,000. Talbot pays the seller $20,000 in cash and finances the rest by giving the seller a note for $80,000. What is Talbot’s initial basis in this machinery?