If the Nominal Interest Rate Is 10 Percent, the Inflation

question 90

Multiple Choice

If the nominal interest rate is 10 percent, the inflation rate is 6 percent, and the tax rate on interest income is 25 percent, what is the after-tax real interest rate?

• A)3.0 percent
• B)4.0 percent
• C)6.0 percent
• D)1.5 percent
• E)3.5 percent

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Definitions:

Cash Payments Journal

A journal used in accounting to record all payments made by a company, including expenses and purchases.

Accounts Payable

Liabilities or amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Double Entry System

An accounting method where every transaction is recorded in at least two accounts, ensuring the accounting equation remains balanced.

Technological Advances

Refers to the progress in technology which enhances productivity, efficiency, and innovation in various fields.