Question
You have just taken out a loan of NOK 1 million. The loan is a fixed-rate loan (serial loan) over 20 years with a real
You have just taken out a loan of NOK 1 million.
The loan is a fixed-rate loan (serial loan) over 20 years with a real interest rate before tax of 4%. The nominal borrowing rate before tax must be adjusted in line with the expected price increase. Assume a price increase of 0% and 3%, respectively.
How much lower is the real value of the payment after tax in the last year (the 20th year) at a price increase during the period of 3% compared to a price increase of 0%?
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Get StartedRecommended Textbook for
Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
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