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1. To prevent depreciation of Turkish lira, Turkish Central Bank (TCMB) increased the interest rates by 6% in November 2020. At the same time, the

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1. To prevent depreciation of Turkish lira, Turkish Central Bank (TCMB) increased the interest rates by 6% in November 2020. At the same time, the Turkish government announced a 10% tax cut for lira deposits to encourage people to keep their savings in the Turkish lira and prevent dollarization of economy. Previously, interest earned from deposit accounts was taxed at 15%. a) Suppose that you deposited 100.000 lira on 01 June, 2020. The bank offers 1% monthly interest for lira deposits at that time but reflects the TCMB increase as well as tax cut after November. Calculate the net balance at the end of December 2020. b) Find the net balance at the end of December without reflecting the changes in interest rates and tax. Use 100.000 principal and 1% interest rate as in previous question. c) Calculate the effective return to investor with and without reflecting changes in interest and tax

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