10% Question 4 (20) a) Assume that a $10,000 loan is made at a nominal contract rate of with all principal and interest due at end of one year Assume rate of inflation How much is the loan worth for the lender? 6% b) Assume that the actual inflation turns out to be 8% What impact will it have on the lender's loan? c) Financial Leverage Assume BTIRRp Assume BTIRRd Assume LTV (loan-to-value ratio) 12% 10% 30% Calculate BTIRRE d) Assume LTV 80% Calculate BTIRRE