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Suppose that weekly interest rate is 0.1% in this year. In the next year, weekly interest rate becomes 0.2%. Assume that there are 52 weeks

Suppose that weekly interest rate is 0.1% in this year. In the next year, weekly interest rate becomes 0.2%. Assume that there are 52 weeks in a year.

a. What are the Annual Percentage Rates (APR) in the first and second years?

b. What are the Effective Annual Rates (EAR) in the first and second years?

c. What is the future value of $1 after 2 years?

d. What is the present value of a payment of $1 to be received in 2 years?

e. What would be the change of purchasing power of todays $1 in 2 years if there is an annual inflation rate of 3%?

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