8144922 FIN ?2005 1 32 Priciples of Finance 18ews Wendy Franey&1 6/2018 12:54 PM

Question

8144922 FIN ?2005 1 32 Priciples of Finance 18ews Wendy Franey&1 6/2018 12:54 PM Homework: 7-1 MyFinanceLab Assignment Score: 0 of 5 pts P9-23 (similar to) (Related to Checkpoint 9.5) (nflation and intecest rates) What would you eapea the The neminal ate of interest woualt beoud to twe decimal places) 12 of 12 (9 complete) HW Score: 44%, 22of 50 pts Ch ??eston Help * a noninal rae off nst to be & the teal ate is 47 percent and the opected irflatian rate is 69 percen Enter your answer in the answer box and then cack Check Ansaer All parts showing 254 PM O Type here to search

Explanation / Answer

Nominal Rate of Interest = 11.39%

Nominal Rate of Return = [ (1 + Real Rate of Return) x (1 + Inflation Rate) ] – 1

Real Rate of Return = 4.20%

Inflation Rate = 6.90%

Nominal Rate of Return = [ (1 + 0.0420) x (1 + 0.0690) ] – 1

= 1.113898 – 1

= 0.113898

= 11.39% [ Rounded to 2 Decimal ]

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