If we require a 15% real return and we expect inflation to be 7% what is...

Question

Question

If we require a 15% real return and we expect inflation to be 7% what is the nominal rate? (HINT: Do not use the approixmation)

business finance

Answer 1

Answer #1

real return = 15%

inflation rate = 7%

nominal rate = (1+ real return)*(1+ inflation rate) - 1

nominal rate = (1+0.15)*(1+0.07) - 1 = 0.2305 = 23.05%

Answer : nominal rate = 23.05% (Thumbs up please)

Answer 2

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