Answered: The rate quoted by Big Bank on a car…

The rate quoted by Big Bank on a car loan is 8 percent. The annual rate of inflation is currently 1.5 percent. What is the approximate real interest rate paid by the consumer on this loan?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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Question

The rate quoted by Big Bank on a car
loan is 8 percent. The annual rate of
inflation is currently 1.5 percent. What is
the approximate real interest rate paid
by the consumer on this loan?

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