Calculate the Nominal Rate If the Real Rate Is 4

question 102

Multiple Choice

Calculate the nominal rate if the real rate is 4.25% and the inflation rate is 3%.

• A)10.18%
• B)9.28%
• C)8.83%
• D)7.38%

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Definitions:

Accounts Payable

The amount a company owes to suppliers or creditors for goods and services purchased on credit, represented as a liability on the balance sheet.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life.

Inventory Change

The difference in inventory levels between two time periods, reflecting purchases, sales, and usage.

Accrued Liabilities

Obligations that a company has incurred but not yet paid for, recognized in accounting to match expenses with the revenues they help to generate.