Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,500 beginning one year from today. The interest rate on the note is 5%.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow

The amount that Canliss borrowed  is $45,459.51  

Explanation:

The amount borrowed is the present value of $10,500 for five years using the discount factor applicable to each to each year as shown below

The formula for discount factor=1/(1+r)^n

r is the rate of interest on the loan which is 5%

n is the year relating to each cash flow ,for instance 1 for year one

present value of the loan=$10,500/(1+5%)^1+$10,500/(1+5%)^2+$10,500/(1+5%)^3+$10,500/(1+5%)^4+$10,500/(1+5%)^5=$45,459.51  

Indeed, inflation is closely related to interest rates and exchange rates, since it is ultimately the loss of value of a currency.

Regarding nominal interest rates, the higher the inflation, the higher the interest rates. This is so because it seeks to cover the loss of value generated by inflation through the interest generated by investments, with the aim that they do not leave the country. Therefore, in the case of the Italian lira, if it had an inflationary rate of between 7% and 20%, interest rates would probably be around 10% and 25%.

At the same time, inflation also affects exchange rates, as this process breaks price parity and generates an imbalance between currencies. Thus, using US dollars, if a product is worth 100 lire and the exchange rate is 100 lire for one dollar; In the case of 20% inflation, the most logical thing would be for the exchange rate to move in the same direction: it would be 120 liras for 1 dollar.