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Not sure how to calculate this question?. Left Right Out Bank Ltd is intending to lend money to a client. The loan is to be
Not sure how to calculate this question?.
Left Right Out Bank Ltd is intending to lend money to a client. The loan is to be repaid in a lump sum after 7 years. The bank's required real rate of return is 3% p.a. The bank expects the inflation rate in the coming year to be 8% p.a., falling to 5% p.a. the following year and 4% p.a. thereafter. What annual interest rate should the bank set?
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