1.) (Inflation and interest rates) You (Inflation and interest rates) You\'re co
ID: 2707057 • Letter: 1
Question
1.) (Inflation and interest rates) You
(Inflation and interest rates) You're considering an investment that you expect will produce an 8 percent return next year, and you expect that your real rate of return on this investment will be 6 percent. What do you expect inflation to be next year? (Inflation and interest rates) Assume the expected inflation rate to be 4 percent. If the current real rate of interest is 6 percent, what ought the nominal rate of interest to be? (Working with an income statement and balance sheet) Prepare an income statement and a balance sheet from the following scrambled list of items. What is the firm's net working capital and debt ratio?Explanation / Answer
INCOME STATEMENT
EXPENSE
AMOUNT
INCOME
AMOUNT
COST OF GOODS SOLD
GROSS PROFIT c/d
DEPRECIATION EXPENSES
INTEREST EXPENSE
MAEKETING,GENERAL & ADM EXP
DIVIDEND PAID
INCOME TAXES
Net profit transferred to balance sheet
320000
230000
SALES
GROSS PROFIT b/d
550000
550000
550000
230000
38000
26000
45000
15000
59850
46150
230000
230000
INCOME STATEMENT
EXPENSE
AMOUNT
INCOME
AMOUNT
COST OF GOODS SOLD
GROSS PROFIT c/d
DEPRECIATION EXPENSES
INTEREST EXPENSE
MAEKETING,GENERAL & ADM EXP
DIVIDEND PAID
INCOME TAXES
Net profit transferred to balance sheet
320000
230000
SALES
GROSS PROFIT b/d
550000
550000
550000
230000
38000
26000
45000
15000
59850
46150
230000
230000
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