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Sara decides to invest $ 1 0 , 0 0 0 in a fixed deposit account that offers a nominal interest rate of 5 %

Sara decides to invest $10,000 in a fixed deposit account that offers a nominal interest rate of 5%. She is aware that the expected inflation rate for the year is 3% and last years inflation was 2%. At the end of the year, Sara receives $10,200 from the account. Calculate the real interest rate in this scenario?

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