Suppose that you want to take out a loan and that your local bank wants to charge you an annual real interest rate equal to 3%. Assuming that the annualized expected rate of inflation over the life of the loan is 1%, determine the nominal interest rate that the bank will charge you. What was the actual real interest rate on the loan if, over the life of the loan, actual inflation is 0.5%?

Q: Suppose a bank offers you a 10% interest rate on a 20-year mortgage to be paid back with monthly…

A: The mortgage amount that can be taken is the present value of monthly payments

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A: Hi, since you have posted a question with multiple sub-parts, I will answer the first three…

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A: The company needs to pay interest on the interest rate over a period of time to the lender.

Q: Suppose you have received a credit card offerfrom a bank that charges interest at 1.4% per…

A: Working note:

Q: Assume that you borrow $5000 and pay back the $5000 plus $250 in interest at the end of the year.…

A: Real interest rate: Principle = $5,000 Interest = $250 Interest rate =  2505,000×100%=5%

Q: Suppose you take out a loan for 160 days in the amount of $14,000 at 7% ordinary interest. After 40…

A: Time has been valuable in all aspects but in terms of finance, time has a money value. The worth of…

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A: Hai there! Thank you for the question. Post has multiple questions. As per company guidelines expert…

Q: What would be the total interest paid

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A: EMI or monthly or annual mortgage payments are the fixed amount paid by the borrower to the lender…

Q: ut an $8,000 car loan that calls for 7 annual payments of $2,400 each.  What is the interest rate?

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Q: Assume you graduate from college with $26,000 in student loans. If your interest rate is fixed at…

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A: Working note:

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A: Dear student we need to use excel to solve this problem. The formulas that you need to understand to…

Q: You borrow $1,000 from a bank at 6% annual interest and promise to pay it back after a year. As you…

A: the real interest rate equals the nominal interest rate minus the expected inflation rate.…

Q: Assume you take out a car loan of $8,600 that calls for 48 monthly payments of $300 each.   a.…

A: Annual Percentage Rate(APR) is the specified rate of interest charged by any of the authorizing…

Q: You plan to borrow P10,000 from your bank, which offers to lend you the money at a 7.5% nominal rate…

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Q: Suppose you take out a loan for 160 days in the amount of $12,000 at 7% ordinary interest. After 40…

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Q: How would be the principal amount of loan if you need to borrow $300,000 for one year with a…

A:

Q: Suppose you take out a loan for 160 days in the amount of $14,000 at 7% ordinary interest. After 30…

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A: In this question we need to computet the real interest rate on the loan.

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A: The question is based on the concept of Business Fianance.

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A: The nominal rate is the rate that the financial institution quotes when giving out or receiving…

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A: Loan Amount = 144,400 Since Monthly payments, Time Period = 35 years * 12 = 420 months Interest % =…