### Determine the new price of a movie ticket

Assignment Help Other Subject
##### Reference no: EM13747617

Suppose Ana is a cinephile and buys only movie tickets. Ana deposits \$3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a movie ticket is priced at \$10.00.

Initially, the purchasing power of Ana's \$3,000 deposit is ___________movie tickets.

For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Ana's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates.

Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Ana will not buy seven-tenths of a movie ticket.

Annual Inflation Rate

0%                5%                8%

# of tickets she can purchase after 1 year   _____           _____           ______

Real interest rate                                          ____             _____          _____

When the rate of inflation is less than the interest rate on Ana's deposit, the purchasing power of her deposit (remains the same/falls/rises) over the course of the year.

#### Dress and personal presentation of employees

Distinguish between different types of information, evaluate and formulate ideas which will lead to a logically presented case - develop an academic essay that critically exam

#### What type of business organisation glen and len operating

What are the different contexts in which the Corporations Act promotes timely disclosure of relevant information? Which types of companies are subject to the highest levels

#### Project on wedding planning

Project on Wedding planning-The learner's project plan may be large and complex. The purpose of the project plan is to meet the needs of the organization by accomplishing th

#### Internet and technology affecting film industry

Internet and technology affecting Film Industry-How are the Internet and other technologies currently affecting the ways in which movies are produced, distributed, and exhibi

#### Why corporate social responsibility is important

Discuss the above statement and suggest what you believe to be the role of shareholders and investors in an organization and state how you would deal with them as you seek s

#### Does productivity growth increase unemployment

Does productivity growth increase unemployment and therefore reduce economic wellbeing - ‘When the average level of prices of goods and services rises, the inflation rate ris

#### Major contention is on the timing of the policy

The major contention is on the timing of the policy. If the government were to operate under a strict balanced-budget rule, what do you think would it have to do in a recess