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Imagine you borrow $1,100 from your roommate, agreeing to pay her back $1,100 plus 11 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 4.30 percent.

What is the total dollar amount you will have to pay her back in a year?

What percentage of the interest payment is the result of the real rate of interest? (Round answers to 2 decimal places, e.g. 17.54.)

a. Total dollar amount?

b. Percentage of interest attributable to the real rate of interest?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92764878

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