The Alphaland treasury is prepping for a major bond issue and needs to understand the costs it is likely to incur. An auction is used to establish the bond's yield (for our purposes, its nominal interest rate). The treasury anticipates the nominal rate will be 3%, but prior experience shows the treasury has been wrong by as much as 2% in either direction. The nominal rate is always established to the quarter-percent (i.e. 1.75%, 2.25%, etc.). The real cost is determined by adjusting for inflation to produce the real interest rate. Current Alphaland inflation rate projections range from 1.5% to 4%. The written formula below shows the relationship between nominal and real interest rates