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The Transocean Inc. plans to make a five-year period payment to offset its debt. The payments begin with a $2,000 payment (in constant dollars )
The Transocean Inc. plans to make a five-year period payment to offset its debt. The payments begin with a $2,000 payment (inconstant dollars) at the end of the first year, and then increase at the rate of 3% per year. Assume that the average general inflation rate is 4%, and the market interest rate is 6% during this five-year period. What is the inflation free interest rate?
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