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Introduction to Financial Math (theory) Betty paid $650 in council rates this year and $650 again in rates next year. The nominal - cost of rates has not increased. When negative inflation Of -4% p.a. is considered, the real cost of rates has actually fallen When the time value of money is considered and given that Betty can earn 2% p.a. on investments, the effective- cost of rates has actually increased (Each blank filled correctly is worth 1 mark)