Question
Suppose yamini $3,000 from her mother, agreeing to pay him back the $3,000 plus 5 percent nominal interest in 1 year. Assume inflation over the
Suppose yamini $3,000 from her mother, agreeing to pay him back the $3,000 plus 5 percent nominal interest in 1 year. Assume inflation over the life of the contract is expected to be 2.25 percent.
Required:
What is the total amount John would have to pay his father back in a year? How much of the interest payment is the result of the real rate of interest?
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Personal Finance
Authors: Jeff Madura, Hardeep Singh Gill
3rd Canadian Edition
978-0133035575, 133035573, 978-0133970524, 133970523, 978-0134040042
