At present the nominal interest rate is 7 percent and the, Accounting Basics

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At present the nominal interest rate is 7 percent and the

Problem

At present, the nominal interest rate is 7 percent, and the expected inflation rate is 5 percent. The current year is the base year for the price index used to calculate inflation.

a. What is the real interest rate?
b. What is the anticipated value of the price index next year?

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Accounting Basics: At present the nominal interest rate is 7 percent and the

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