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A bank offers loans with inflation protection and with no default risk. The loan amount is $200 and to be repaid with a single payment
A bank offers loans with inflation protection and with no default risk. The loan amount is $200 and to be repaid with a single payment after 2 years. The bank requires an annual interest rate of 2.9% compounded continuously plus the rate of inflation. If the annual rate of inflation compounded continuously is .79% during the first year and 1.25% during the second year, find the payment amount due after 2 years. Possible Answers A 216.31 B 216.53 216.85 D 217.46 E 217.83
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