the total dollar amount you will have to pay her back in a year? What approximate percentage of the interest payment is the result of the real rate of interest? (D answers to 2 decimal places, e.g. 17.54.)
the total dollar amount you will have to pay her back in a year? What approximate percentage of the interest payment is the result of the real rate of interest? (D answers to 2 decimal places, e.g. 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
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Imagine you borrow $700 from your roommate, agreeing to pay her back $700 plus 9 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 5.39 percent. What is
the total dollar amount you will have to pay her back in a year? What approximate percentage of the interest payment is the result of the real rate of interest? (Do not round intermediate calculations. Round
answers to 2 decimal places, e.g. 17.54.)
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Total dollar amount
Approximate percentage of interest attributable to the real rate of interest
$
763
40.11
%
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