si fin w3 1 exam ans - SI cfw collaborative peer-led FIN 300 groupstudy structured EXAM 1 STUDY GUIDES MATH ANSWERS 9 Nominal rate = real rate expected

si fin w3 1 exam ans - SI cfw collaborative peer-led FIN...

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This material is produced by the SI Program at Arizona State University student success .asu.edu { collaborative peer-led structured FIN 300 SI group study EXAM 1 STUDY GUIDE S MATH ANSWERS 9. Nominal rate = real rate + expected inflation 9.2% = real rate + 3.7% Real rate = 9.2% - 3.7% = 5.5% 10. Original loan amount = $650,000. Total amount paid to bank = 30 yrs * 12 mo/yr * $1,986.11 = $715,000 Amount paid in interest = $65,000 = $715K - $650K Interest rate = amount paid in interest / loan amount. $65,000/$650,000 = .1 = 10% 10% is the nominal rate (the rate you see) the bank charges you. If expected inf is 5%, the real rate of interest is 5% 15. There s some rounding error in there, but your answer should be close to this EBT $16,789,050 Bracket
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Unformatted text preview: Marginal Rate Marginal Amt Total Amt $0 $50,000 15.00% $7,500 $7,500 $50,001 $75,000 25.00% $6,250 $13,750 $75,001 $100,000 34.00% $8,500 $22,249 $100,001 $335,000 39.00% $91,650 $113,899 $335,001 $10,000,000 34.00% $3,286,100 $3,399,999 $10,000,001 $15,000,000 35.00% $1,750,000 $5,149,998 $15,000,001 $18,333,333 38.00% $679,839 $5,829,837 $18,333,334 35.00% 19. TAT = 1.2 NPM = 9.6% EM = 2.4 What is ROE? ROE = TAT * NPM * EM = 1.2 * 9.6% * 2.4 = 27.65% (if you use the decimal form of NPM, your ans will be 0.2765) What is NI for the year? TAT = Net sales / Total Assets. NPM = Net Income / Net Sales TAT = Net sales / Total Assets => 1.2 = NS/1,000,000. NS=1,200,000. NPM = Net Income / Net Sales => 0.096 = NI / 1,200,000. NI= $115,200...
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