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You have a loan with a balance of $100,000 in todays dollars. You dont have to make regular payments for this loan. All (monthly compounding)
You have a loan with a balance of $100,000 in todays dollars. You dont have to make regular payments for this loan. All (monthly compounding) interest just gets added to the balance, and you repay it in full at the end of five years. The loan has a nominal APR of 6.7% compounded monthly. How high would inflation have to be in order for the balance of your loan to be only worth a real $50,000, expressed in todays dollars, at the end of 5 years? Express your answer in terms of EAR.
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