With a nominal interest rate of 8%, an expected inflation rate of 3%, and interest income taxed at a 25% rate, what is the expected after-tax real interest rate? 5% 3.75% 3% 1%

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.