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6) You make 8 annual end-of-year payments of $13,000 each on a loan with a market rate of 7%. If annual inflation is 5%, what

6) You make 8 annual end-of-year payments of $13,000 each on a loan with a

market rate of 7%. If annual inflation is 5%, what would be the equivalent annual

payment in constant dollars? A logical first step might be to compute the present

value of the 8 loan payments.

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