The long term Borrowing index (LTBI) of the year 2017. Given: Difference in inflation is 3\%. Average inflation rate is 2.3\%.

Cabiolab

Cabiolab

Answered question

2021-08-16

The long term Borrowing index (LTBI) of the year 2017.
Given: Difference in inflation is 3%.
Average inflation rate is 2.3%.

Answer & Explanation

Arham Warner

Arham Warner

Skilled2021-08-17Added 102 answers

Calculation:
Assume LTBI in 2000 as 100.
Calculate the long term borrowing index (LTBI) in year 2017.
=(LTBI2000)[1+Difference in inflation)×(1+Average inflation)
Substitute 100 for LTBI in 2000 and 3% for Difference in inflation in Equation (I).
LTBI=100[(1+0.03)×(1+0.023)]20172000
=100[1.03×1.023]17
=100(2.4329)
=243.29
Conclusion:
The long term Borrowing index (LTBI) in the year 2017 is 243.29.

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