Imagine you borrow $600 from your roommate, agreeing to pay her back $600 plus 7 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 3.66 percent. What is the total dollar amount you will have to pay her back in a year? Whul appN Oximate percentage of the interest payment is the result of the real rate of interest? Use the simplified Fisher equation. (Do not round intermediate calculotions. Round answers to 2 decimal places, eg. 17.54)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Imagine you borrow $600 from your roommate, agreeing to pay her back $600 plus 7 percent nominal interest in one year. Assume
inflation over the life of the contract is expected to be 3.66 percent. What is the total dollar amount you will have to pay her back in a
year? Whul appN Oximate percentage of the interest payment is the result of the real rate of interest? Use the simplified Fisher
equation. (Do not round intermediate calculotions. Round answers to 2 decimal places, eg. 17.54)
Transcribed Image Text:Imagine you borrow $600 from your roommate, agreeing to pay her back $600 plus 7 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 3.66 percent. What is the total dollar amount you will have to pay her back in a year? Whul appN Oximate percentage of the interest payment is the result of the real rate of interest? Use the simplified Fisher equation. (Do not round intermediate calculotions. Round answers to 2 decimal places, eg. 17.54)
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