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Your firm recently lent Arlington Enterprises $23,000,000 for one year at an interest rate of 12.00%. Inflation during the year is expected to be 3.20%.

Your firm recently lent Arlington Enterprises $23,000,000 for one year at an interest rate of 12.00%. Inflation during the year is expected to be 3.20%. Answer the following questions to gauge the impact of inflation on the real interest to be paid. Required: a. How much interest income will your firm receive from the transaction, calculated the traditional way? b. What is the approximate real rate of interest? (Round all answers to 2 decimal places.) c. What is the real portion of the interest income using the approximate real rate? d. By how much will interest income be understated due to inflation

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