Question
You will receive $100 from a savings bond in 4 years. The nominal interest rate is 7.00%. What is the present value of the proceeds
You will receive $100 from a savings bond in 4 years. The nominal interest rate is 7.00%.
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What is the present value of the proceeds from the bond?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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If the inflation rate over the next few years is expected to be 2.00%, what will the real value of the $100 payoff be in terms of todays dollars?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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What is the real interest rate?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
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Calculate the real payoff from the bond [from part (b)] discounted at the real interest rate [from part (c)].
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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