Loan interest and determination of its rate. Nominal and real interest rates

The capital market is an integral part of the factor market. Capital as an economic resource is an object of study for many representatives of various scientific schools and areas of economic science, starting from the classics of political economy.

A. Smith understood capital as an accumulated stock of things or money. According to D. Ricardo, capital was the means of production, therefore even a stick and a stone in the hands of a primitive man are also elements of capital. K. Marx argued that capital is a value that brings surplus value, or self-increasing value. A. Marshall following N.U. Sinior considered capital to be the “sacrifice” of the capitalist, who refrains from spending all his property on personal consumption and converts a significant part into factors of production. Such sacrifice deserves reward in the form of profit.

In modern economic theory, capital is defined as investment resources. In the factor of production market, capital is understood as physical capital (equipment, machines, buildings, structures, raw materials, materials, etc.), using which you can increase income in the future.

The owner of the capital factor receives income in the form of interest. In a competitive market, a firm compares the marginal product of each factor of production with the cost of purchasing it, hence the price of capital is the income that the owner of the factor can receive. In this case, the higher the productivity of this factor of production, presented as capital assets, the higher the interest on capital. Capital, like labor, has productivity, thanks to which it is possible to increase production, i.e. increase income. Hence capital is in demand because it is productive.

The subjects of demand for capital are entrepreneurs. The demand for capital is the demand for investment funds necessary to acquire capital in physical form (machinery, equipment, etc.). This means that an entrepreneur needs a certain amount of money to acquire capital in physical form. Graphically, the demand for capital can be represented by a curve with a negative slope, since the laws of supply and demand also apply in the capital market (Fig. 24 a). The graph shows that with an increase in investment funds (I), the marginal product (MP) decreases, that is, in this case the law of diminishing returns applies.

Rice. 24. Demand curve for capital (a); an increase in income with an increase in the demand for capital (b).

This law helps to understand the dynamics of income on capital, or, as it is also called, the dynamics of net productivity of capital. Other things being equal (labor and land remaining constant), net productivity, or the rate of return on capital, tends to fall as investment funds increase. Therefore, the level of income on capital in developed countries may be lower than in less developed countries, this causes the export of capital or its flow from one industry to another, which leads to an equalization of the rate of income on capital. However, with changes in other factors (introduction of scientific and technical progress, etc.), an increase in income may occur with an increase in demand for capital (Fig. 24 b).

The supply of capital in the factor market is graphically depicted by the Sc curve, which has a positive slope, since the entities offering capital refuse its independent alternative use (Fig. 25 a). The more money is offered to lend, the greater the marginal opportunity cost (MOC).

By combining the demand and supply graphs together, we obtain a single graph of supply and demand for capital, where r is the interest level, and I is the volume of investment (Fig. 25 b). In the capital market, price equalizes supply and demand, i.e. Dс = Sс. At point E, the marginal return and the marginal opportunity cost coincide and the graph shows the equilibrium price or return on capital in the form of interest.

Rice. 25. Capital supply as a reflection of the costs of lost opportunities to use capital (a); equilibrium in the capital market (b).

The time factor has a great influence on decision making. Owners of capital refuse the current consumption of capital, offering it on loan, because they are confident that in the future they will receive greater income. Interest is a payment for the opportunity for other subjects of the current use of capital. Economic theory calls this behavior of economic entities in a market economy time preference. In order to induce the owner of capital to abandon the current consumption of resources, it is necessary to reward him for such a refusal, and economic agents who now have the opportunity to use borrowed funds are forced to pay the owner of the capital. Hence, interest is the price that people pay to obtain resources now, rather than waiting until they have earned the money with which to buy those resources.

The price of capital or interest is determined by both supply and demand, because one cannot exist without the other. The interest rate is the ratio of the income on capital received on a loan to the amount of capital lent, expressed as a percentage. For example, if you loan $2,000 and receive an annual income of $100, then the interest rate is:

100: 2,000 x 100% = 5%.

In this case, the risk factor plays an important role, because when you lend your funds, there is no full guarantee that you will be able to use this money in the future. Therefore, the higher the risk in providing a loan, the higher the interest rate should be.

The interest rate is critical for a firm when making investment decisions. How can you determine ROI unless you compare it to the market interest rate? Therefore, the entrepreneur always compares the expected level of return on capital with the market interest rate. Investment can be made if the level of income is higher than or equal to the market interest rate on loans. For example, if you decide to invest 2 million dollars in a business and receive 400 thousand dollars from this capital in a year, then this project can be considered profitable, since the invested funds will be returned and income will be received, i.e. income level is:

400,000: 2,000,000 x 100% = 20%.

But if the market interest rate is 25%, then such a project cannot be considered profitable, because you could lend your funds and receive $500 thousand in income. Therefore, in a market economy there is always alternative economic decisions, when it is necessary to compare different options for economic decisions in order to choose the most profitable investment project.

One of the ways to justify the effectiveness of investment projects, as we found out, is to compare the level of return on capital with the interest rate. There is another method - this is the discounting procedure, which consists in the fact that when implementing investment projects (building a plant, laying a railway, etc.), it is necessary to compare the amount of today's costs and future income. In other words, discounting calculates the current equivalent of the amount that is paid after a certain period at the existing interest rate.

Discounting is determined by the formula:

where Vp is the present value of a future amount of money;

Vt is the future value of today's amount of money;

t - number of years;

r - interest rate.

To understand this procedure, consider a conditional example. Suppose, if today you invest 4 million dollars and build a factory for the production of ceramic tiles, then within 10 years you can receive 600 thousand dollars annually. Is this project profitable? In 10 years we will receive 6 million dollars (600,000 x 10). Each of these portions of income will be received in the future (in a year, then in 2 years, and so on for 10 years). It is necessary to compare today's costs of 4 million and the discounted value of the future income stream. This value is calculated by the formula:

,

where the number in the numerator from 1 to t means the time of receipt of income in a year, in 2, etc. With r= 0.02 we get 5.34 million dollars:

Then we compare two values: 4 million, which must be invested today, and the discounted amount of 5.34 million. Since 5.34 > 4, then at this interest rate the project can be implemented.

When analyzing interest categories, a distinction is made between nominal and real interest rates. The nominal interest rate is the current market interest rate without taking into account inflation. The real rate is the nominal rate minus the expected inflation rate. For example, the nominal annual interest rate is 12%, the expected inflation rate is 4%, then the real interest rate will be 8% (12-4).

Thus, the general conclusion can be drawn that the prices of investment goods are set depending on the income that can be obtained in the future as a result of productive consumption, taking into account the interest rate. Interest is the factor income of the owner of capital, and for the borrower of capital it is an expense (cost). In the capital market, as in other markets, equilibrium is established when demand equals supply, i.e. the income of some is equal to the expenses of others. This is a kind of balance of a market economy.

1.Capital and interest

Capital is one of the key economic categories. Capital is a factor of production, represented by all the means of production that people have created in order to use them to produce other goods and services. These include tools, equipment, buildings, structures, etc.

In economic analysis, along with the term “capital”, the concept of “investment” or “investment resources” is used.

The term “capital” is used to denote capital in embodied form, i.e. embodied in the means of production. Investments are capital that has not yet been materialized, but is invested in the means of production.

Let us consider the process of using capital, which is closely related to the idea of ​​its structure.

During the production process, different elements of physical capital behave differently. One part of the capital (buildings, machinery, equipment) functions over a long period of time: from several years to several decades, the other part of the capital (raw materials, materials, electricity, water, etc.) is used once.

Fixed assets are that part of productive capital that participates in the production process over several production cycles and transfers its value to the goods created in parts.

Each element of fixed capital has a legally established service life, according to which entrepreneurs accumulate the value transferred to the goods and services produced in the form of depreciation charges.

Working capital is a part of the company’s capital that participates in one production cycle and completely transfers its value to finished products.

When selling goods, the money spent on elements of working capital is fully returned to the entrepreneur and can be used again to purchase factors of production. The cost of fixed capital does not return so quickly; it takes years, sometimes decades. Consequently, production costs include the entire cost of working capital, and only part of the cost of fixed capital is included, calculated based on the entire life of this capital (Fig. 1).

Rice. 1 - Equilibrium in the capital market

Fixed capital, embodied in means of labor, is subject to wear and tear as it is used. There are two forms of wear and tear: physical and moral.

Physical wear and tear occurs, firstly, during the production process itself and, secondly, under the influence of natural forces (metal corrosion, concrete destruction, loss of elasticity of plastic). The longer the operating time, the greater the physical wear and tear of fixed capital.

Obsolescence is the second form of wear and tear. This is a reduction in the useful properties of fixed capital in the eyes of users compared to what is offered in return. It can be caused by two reasons: 1) due to the creation of similar, but cheaper means of labor; 2) due to the creation of more productive means of labor at the same price.

Funds for the renewal of fixed capital are accumulated in the depreciation fund. This fund is formed through depreciation charges, which are the monetary form of the value of operating fixed assets transferred to products. These deductions are included in the total cost of the enterprise for the production of products. Depreciation is, in fact, a source of renewal (simple reproduction) of fixed capital.

Each factor of production brings its own income, which rewards its owner. For capital, such income is interest.

Interest income (interest) is the return on capital invested in a business. This income is based on the costs of alternative use of capital (money always has alternative uses, for example, it can be put in a bank, spent on stocks, etc.). The amount of interest income is determined by the interest rate, i.e. the price a bank or other borrower must pay a lender for the use of money for a specified period.

The subjects of demand for capital are businesses, and the subjects of supply are households (they offer sums of money, i.e. their savings).

The demand for capital is the demand for borrowed funds. It can be represented graphically as a curve (Dc) with a negative slope. The supply of capital is graphically represented by a curve (Sc) with a positive slope. At the point of intersection of these two curves (E), equilibrium is established in the capital market. It corresponds to the equilibrium interest rate (r0).

The supply of borrowed funds within the market as a whole is directly dependent on the volume of bank deposits, i.e. citizens' savings. The volume of savings is directly determined by the level of interest paid on deposits. The higher it is, other things being equal, the greater the amount of savings and the greater the volume of borrowed funds offered.

When making capital investments (investments), the time value of money is calculated. Money is invested in the implementation of investment objects today, and income from investments will be received over the entire period of operation of the object. Capital is nothing more than discounted value. This means that any element of wealth that brings its owner a regular income over a long period of time is capital and its value is calculated using discounting.

1.2 Various theoretical interpretations

Even at first glance, it is clear that capital is an all-encompassing, universal and multidimensional category. It is no coincidence that K. Marx entitled his multi-volume work “Capital”. Whatever phenomenon of reality is considered, we are sure to encounter this concept. Capital mutually determines all relationships without exception. He is everywhere either present or as if present.

Any researcher who undertakes to write about capital must certainly set himself the task of narrowing the problem. The same applies to many interpretations of capital: from attempts to give a scientific interpretation to the so-called “common sense”. The discrepancies here are so great that we have no choice but to carry out a primary classification of this variety. Let's start with the simplest thing. Let us present the many names of capital that we constantly encounter in the scientific and economic literature, in this order (Fig. 2):

Rice. 2 - Order of presentation of names of capital

Now let’s imagine the simplest diagram (Fig. 3):

Rice. 3 - List of main names of capital

Naturally, there are no claims here to a complete list of names of capital (some of them are indeed strictly scientific, and some are just metaphorical). The names are followed by interpretations that sharply differentiate different schools of political economy. In ancient views, of course, there could not yet be a definition of what did not exist. However, they cannot be ignored, since they provide insight into the origins of knowledge about capital. Thus, to some extent, the forerunner of views on capital can be considered the views of such a philosopher as Aristotle, who, however, considered any accumulation of money unnatural, devoid of meaning.

The earliest origins of approaches to the category of “capital” can be found in the works of Ibn Sina (Avicenna 980-1037). He formulated nine factors of life: earth, air, fire, nerves, life juices, members of the body, soul, strength, mental activity. Economic, physical, psychological, and moral characteristics are intricately intertwined here.

Ancient scientists did not give scientific classifications, but many centuries later, with the formation of political economy as a science, each school considered it its duty to carry out a scientifically based systematization of categories and, naturally, capital occupied a central place here.

It is impossible in this article to consider in detail all the theoretical views on capital and all the scientific schools that characterize it. Yes, this is not necessary. We will limit ourselves only to the subject characteristics of the concept, on the basis of which we will carry out the grouping. Although we follow the principle of historicism, it is, in essence, not so important to us who spoke out about capital and when. The emphasis will be on the essence of the concept.

I. Capital as money, wealth

“Money is a means for smart people, and an end for fools.” A. Decourcel

In everyday life, capital is most often understood as a sum of money that generates income for the owner. This view of capital has been expressed by many thinkers, who, as a rule, proceeded from the individual private economy, and not from the general economy as a whole. Often attention was paid to one most common form in which a sum of money provides income, and only this form was recognized as capital.

II. Material and material interpretation of capital (problems of frugality, stock)

“He who is not thrifty will suffer” Confucius.

This interpretation has become widespread. We will dwell on it in more detail. Let's start with the general provisions.

The development of civilization is based on continuity, i.e. on the fact that each new generation uses the acquisition of previous generations and adds its share to them, working, in turn, not only for the present, but also for the future. In economic life, the connection between the past and the present is expressed, including through capital. In this aspect, the essence of capital is: 1) that it is the result of previous activity and 2) that accumulated items are used not for personal consumption, but for the production of new things. The physical weakness of a person determines the use of tools and means of labor, which were generalized by many thinkers under the same name “capital”.

III. Capital as a production relation

“The rich man does not own his property, but property owns him.” Diogenes

“Property is the fruit of theft” P. Proudhon

This point of view was adhered to by the classics of Marxism and, to one degree or another, by their followers, i.e. various currents of socialist, social-democratic and democratic thought. Marxists emphasized the socio-economic essence of capital, identifying it with the production relations of the capitalist mode of production, when capital and labor are divided by ownership of the means of production. At the same time, the category “labor” was given the palm. Capital itself is represented by a bunch of unpaid labor. He lives by working. The relations that arise from the monopolization of ownership of the means of production in the hands of entrepreneurs and the lack of them in the proletariat - this is what is meant by capital.

“...Capital is not a thing, but a certain, social production relation belonging to a certain historical formation of society, which is represented in a thing and gives this thing a specific social character.”

Without going into details of the well-known definitions of capital given by K. Marx and the Marxists, we will only note the extreme rigor and scientific integrity of the evidence. As an example, let us cite a letter from F. Engels to K. Hirsch. The following remark was made: “The worker’s capital is himself. This sounds very nice, but the word capital loses the last vestige of its meaning here. Why the hell do you need to translate sensible things into the unreasonable language of philistine phrases?”

Summarizing what has been said, we can reduce the interpretation of capital as a production relation to the following:

2. Capital is not a thing, but a production relation that is represented in a thing. “Capital,” K. Marx pointed out, “is not the sum of material and produced means of production. Capital is means of production transformed into capital, which in themselves are not capital, just as gold or silver in themselves are not money.

Marx distinguished between two types of capital (constant and variable) and this is his cardinal difference from all schools and interpretations. This distinction was made in terms of the role of different parts of capital in the process of producing surplus value.

IV. People's capital

“Just as one cannot blame for an involuntary misconduct, one cannot praise for a forced good deed.” Euripides

Based on the three main spheres of economic activity, capital is distinguished according to three characteristics: 1) personal, 2) entrepreneurial, 3) national.

All of them very often overlap in meaning, and it is quite difficult to separate each of them. Let us present the differences that exist in the literature between entrepreneurial and people's capital. (Characteristics of personal capital were given earlier).

For an entrepreneur, capital is important to the extent that he spends money on it, and also to the extent that it brings monetary profit. If all the entrepreneur’s calculations come down to a monetary value, then its natural form is important for the people’s capital.

A little more detail about “people's” capital as such. Many sources indicate that all production expresses an economic attitude towards the people. The totality of all producers and consumers, united in one state on a common territory, form public spheres of community life, have their own specific tasks and, on unique grounds, relate to individual manifestations of the economy.

People's capital, in addition to material values, contains an equally important intangible value. Moral wealth is reflected in the people's honesty, enterprise, degree of hard work and professional education. We believe that the views of the great Russian democrat N.G. Chernyshevsky fits well into this interpretation. By capital he understood “the entire stock of both material and moral wealth acquired by the nation as a result of its previous labors...”. He gave a clear example: if London, Manchester and Liverpool burned down with all the banks, docks and warehouses... it would be a heavy, but not a fatal blow. In 15-20 years, new offices, etc., would stand in the same places, filled with even more goods.

Description of work

Capital is one of the key economic categories. Capital is a factor of production, represented by all the means of production that people have created in order to use them to produce other goods and services. These include tools, equipment, buildings, structures, etc.
In economic analysis, along with the term “capital”, the concept of “investment” or “investment resources” is used.
The term “capital” is used to denote capital in embodied form, i.e. embodied in the means of production. Investments are capital that has not yet been materialized, but is invested in the means of production.

Interest as a return on capital. Nominal and real interest rates.

The concept of “capital” as a resource in economic theory includes themselves means of production created by people. The use of capital brings income to its owners in the long term. However, to receive income from the use of capital, it is necessary to make investments in the current period. Thus, capital invested in the current period will ensure an increase in production in the future.

The percentage ratio of the marginal, additional product received in the future to the currently invested capital is called interest income on capital.

In the real market, capital circulates in monetary form, so a market for monetary capital arises and develops. Money capital is not an economic resource in the sense that money itself does not participate in the production of goods and services. However, real capital means of production. To begin or increase the production of goods or services, entrepreneurs make investment demands for real capital. This requires financial capabilities and the availability of monetary capital. The money can be received through a loan, in the form of shares or a saved portion of profits.

In this regard, there arises concept of interest rate. Loan interest is the payment for the use of money capital. Loan interest rate (interest rate) this is the price of using money, the price of money capital

From the point of view of the seller of money capital, the interest rate is return on capital.

The equilibrium interest rate is determined the intersection of the money demand line and the money supply line. At the same time, the aggregate demand for money includes the demand for money for transactions and the demand for money from assets (money as a medium of exchange and as savings). Demand is inversely proportional to the interest rate.

Money supply is regulated state monetary policy.

The cost of using money is considered not as an absolute value, but as a percentage of the amount of money. As a result, it is possible to compare prices for providing loans of different amounts.

When analyzing interest categories, it is important to distinguish between nominal and real interest rates. Nominal rate this is the rate expressed in monetary units at the current exchange rate, excluding inflation. The real rate takes into account the purchasing power of the monetary unit and, at a low level of inflation, is approximately equal to the nominal rate (minus the inflation rate). In conditions of inflation, the purchasing power of the amount received on credit decreases towards the end of the term. Therefore, the real interest rate may differ greatly from the nominal one, which is taken into account when deciding on investments in any objects.

In an economy, different interest rates exist simultaneously. The following factors influence the interest rate:

1. Risk level;
2. Loan terms;
3. Loan size;
4. Limitations on the conditions of competition in the money market;
5. Taxation of income.

The role of the interest rate in the economy is due to the fact that it influences the level of investment and the distribution of monetary and real capital between industries and firms. Comparing interest rates when choosing investment options helps efficient distribution of resources, their use to implement the most profitable projects.

By influencing the level of production of investment goods, the interest rate affects overall output, employment and prices. In order to regulate output, employment and prices, monetary authorities seek to influence the interest rate through the supply of money. A decrease in interest rates leads to to an increase in investment and production volume, and its increase leads to the reverse process.

Each factor of production, as already noted, creates its own income, which ultimately rewards the owner of the corresponding factor. For capital, such income is interest.

Interest income is the return on capital invested in a business. This income is based on the costs of alternative uses of capital (money always has alternative uses, in particular, it can be placed in a bank, spent on stocks, etc.). The amount of interest income is determined by the interest rate, i.e. the price a bank or other borrower must pay a lender for the use of money over a period of time. If the bank interest rate is 10% per annum, then the investor will not invest money in a business that can provide 5% annual income. According to the laws of the market, he will invest money where the income, all other things being equal, will be at least 10% per annum.

But why should you pay interest? What is it a payment for? For the first time, the Austrian economist E. Böhm-Bawerk and the Swedish economist K. Wicksell gave a scientific answer to this question. The economic basis of interest, from their point of view, is the relative dissatisfaction of current needs and the resulting higher valuation of today's goods compared to future goods.

To explain why interest is paid, we need to understand why today's goods are more valuable than future goods. The answer is that the use of goods that a person currently lacks increases the degree of satisfaction of his needs and expands the range of his capabilities. When it comes to resources, managing them now allows people to take actions that can lead to additional income over time. It is this opportunity that motivates people to borrow money and pay a price for borrowing, called interest.

5.5. Tasks and exercises

Task No. 1

The population is 100 million people, 24 million people. – children under 16 years of age, as well as people in long-term isolation (in psychiatric hospitals, correctional institutions, etc.); 30 million people dropped out of the labor force; 4.6 million people - unemployed.

Calculate:

a) the size of the workforce;

b) unemployment rate.

Problem No. 2

The total population is 258 million people. including the disabled - 63 million people, the working population - 195 million people, including those who do not want to work - 65.5 million people, in total those who want to work - 129.5 million people. Number of employed – 120.8 million people. Registered unemployed – 8.7 million people. Determine the unemployment rate?

Problem No. 3

What would economic growth have to be to reduce unemployment from 8 to 6% in one year (assuming Okun's number is 3%)?

Problem No. 4

In the country, the total adult population (16 years and older) is 188.1 million people, employed – 119.0 million people, unemployed – 6.5 million people. Determine: the total workforce; unemployment rate; share of the labor force in the total adult population.

Problem No. 5

Under conditions of full employment, the level of frictional unemployment should (indicate the correct answer):

a) equal 0;

b) be less than 1%;

c) be less than the cyclical unemployment rate;

d) all previous answers are correct.

Problem No. 6

Nominal GNP in the first year amounted to 1000 billion. dollars. The natural unemployment rate was 6%, the actual rate was 8%. What is the volume of potential GNP in the ith year?

Problem No. 7

The table shows data on labor resources and employment, thousand people.

Calculate the number of unemployed and the unemployment rate in years 1 and 5?

How to explain the simultaneous growth of employment and unemployment?

Problem No. 8

Nominal GNP is equal to 750 billion dollars. The natural unemployment rate is 5%, the actual rate is 9%. What volume of products in value terms is underproduced in the country?

Problem No. 9

The country's workforce is 700 thousand people. In 2006, the labor supply and demand functions had the form:

LD= 900 – 2W;LS= -300 + 4W.

where W is real wage.

Based on the use of the classical equilibrium model, determine the number of unemployed.

In 2007, workers managed to achieve an increase in average wages by 15%. Determine how many workers were laid off in 2007 if it is known that the consumer price index this year compared to the previous year was 106%.

Problem No. 10

Over 8 years, wages in country A increased by 25%, and the cost of living by 60%. Determine changes in the level of real wages. What should be understood by nominal and real wages?

Problem No. 11

A plot of land costs 1000 den. units, and renting it out brings in an income of 100 den. units Determine the interest rate.

Problem No. 12

The rental price of a land plot (rent per year) is 450 den. units The annual interest rate is 7%. Calculate the capital price of the land plot.

Task No. 13.

300 den were invested in three equal plots of land. units in each. Average profit rate -20%. The harvest in the first plot was -5 centners, in the second -6 centners, in the third -10 centners. Determine the amount of differential rent.

Problem No. 14

What will be the price of a plot of land if the landowner receives 60 thousand denies annually? units ground rent, and the bank pays depositors 10% per annum?

Problem No. 15

The owner of the land receives an annual rent for the leased plot of 8 thousand den. units There are agricultural buildings and structures on the site worth 50 thousand den. units with a service life of 10 years. The bank interest rate is 50% per annum. Determine the amount of ground rent.

Problem No. 16

Along with the land plot, a building worth 500 thousand rubles was leased. The service life of which is 20 years. Interest rate – 4%. Calculate the amount of ground rent if the rent is 85 thousand rubles.

Problem No. 17

The rent increased from 2000 to 6000 rubles, and the interest rate during the same time decreased from 4 to 2%.

In what direction and how many times did the price of the land plot change? To what extent is this caused by rising rents and to what extent by falling interest rates? Why is the price of land called capitalized rent?

Problem No. 18

Determine the interest rate. The amount of loaned capital is $1000. The annual income received is $50.

Problem No. 19

Three equal-sized plots of land are occupied by the same crops.

Determine the sum of the diff. rents of plots 1 and 2, assuming that the products are at a production price determined by the cultivation conditions in the worst plots.

Problem No. 20

Suppose a plot of land is sold at a price of 30 thousand dollars. This plot can be leased in perpetuity with a rent of 5 thousand dollars per year. The interest rate is 10%. Will you buy this piece of land?

Problem No. 21

Investments in the business (construction of a gas station) investments are equal to 1 million dollars. A year later, an income of 200 thousand dollars is received. The market interest rate on loans is 25%. Is this a profitable project?

Problem No. 22

How much is 10 million rubles worth? Which will be received in a year, provided that the bank rate is 10% per annum.

Problem No. 23

Future income is 10 million rubles, the interest rate is 10% per annum. What will be the discounted value of this income if it is expected to be received in 1 year?

Problem No. 24

The owner of the warehouse leased it for 3 years and received at the end of each year 110,121 and 133 thousand dollars. The interest rate is 10%. Find the discounted return.

INTRODUCTION 2
1. CAPITAL AND INTEREST INCOME 3
CAPITAL AND ASSOCIATED PRODUCTION 3
RETURN ON CAPITAL LEVEL 4
TIME PREFERENCE 6
2. LOAN CAPITAL MARKET 8
STRUCTURE OF THE MODERN INTERNATIONAL LOAN CAPITAL MARKET 11
PLACE OF THE INTERNATIONAL CAPITAL MARKET IN THE WORLD CAPITALIST ECONOMY 12
CONCLUSION 19
REFERENCES 20

Introduction

One of the three classical factors of production is capital.
CAPITAL (from French, English capital, from Latin capitalis - main) - in a broad sense, is everything that can generate income, or resources created by people to produce goods and services. In a narrower sense, it is a working source of income invested in a business in the form of means of production (physical capital). It is customary to distinguish between fixed capital, which represents part of the capital funds involved in production over many cycles, and circulating capital, which participates and is completely consumed during one cycle. Money capital is understood as the money with which physical capital is acquired. The term “capital”, understood as capital investments of material and monetary resources in the economy, in production, is also called capital investments, or investments.
The financial market (capital market) has very specific features that characterize the features of supply in this market and require special attention.

1. Capital and interest income

Capital includes all available means of production that are created and are being created by people: tools, machines, infrastructure, as well as intangible things, such as computer programs. Some part of the capital can take quite tangible forms, for example, equipment for mining operations, machines for processing stone, etc. Land reclamation is another form of capital; it includes the implementation of irrigation works, which increases soil fertility, etc. In addition, knowledge, skills and experience acquired on the basis of practical activities and learning processes are an example of the human capital of an individual. Next we will look at some features inherent in all of these forms of capital.

Capital and associated production
The main feature inherent in all the considered forms of capital is a certain agreement, if you like, a transaction between the present and the future. Indeed, in order to accumulate a certain initial capital in the future, today one has to endure the inconvenience associated with the inability to immediately use the alternative value of this capital in the process of its accumulation. Let's say you are fishing in a pond, but you don't have any fishing equipment. Perhaps you will be able to catch several fish with your hands during the day, providing yourself with a meager dinner. However, there is an alternative that is unpleasant at first glance: go to bed hungry, but weave a net for catching fish during the day. But tomorrow's catch cannot be compared with today's. The price of capital accumulation is similar in real economic life.
This simple story illustrates such an important concept in economics as associated production. Thus, the production of cars on a car assembly line requires significant capital investments - significantly larger than assembling a car in a handicraft workshop. Before an automobile plant produces its first product, it is necessary to attract enormous forces and funds, labor and material resources. But subsequently, the productivity of its main conveyor will simply be incomparable with the capabilities of car mechanics in a small workshop. Similarly, the construction of an irrigation canal is a related method of irrigation compared to bringing water to the fields in barrels and buckets. The development of computer software in connection with the computerization of accounting operations requires the investment of effort and money. However, in the long term, these investments will pay off with significant time savings and a reduction in maintenance personnel.

Rate of return on capital
Associated production, as well as production using investment capital, can be represented as a process of transformation of current costs into output in some foreseeable future. In our example with fishing, current costs are labor time that could be used to catch fish by hand, but which is used to make fishing equipment. In this aspect, the use of capital as production costs can be analyzed from the perspective of the marginal product method.
In Fig. 1. A graphical interpretation of a simple two-parameter model is presented, in which production is removed from the sphere of consumption and used to create capital focused on production costs in the future.
In the presented diagram, the x-axis shows the amount of capital measured in comparable physical units (in the example with fishing, this is the size of the network cell). Along the y-axis is the result of the use of capital (its return), reduced to a unit of future production produced as a result of today's savings (tomorrow's catch plus the catch that was sacrificed for the production of the net).......

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