You Lend $5,000 to a Friend for One Year at a Nominal

question 78

Multiple Choice

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result, you will receive ________ at the end of the year, but that money has a purchasing power of ________.

• A)$5,050; $5,025
• B)$5,100; $5,050
• C)$5,500; $5,250
• D)$6,000; $5,500
• E)$5,500; $6,000

---

Definitions:

Illegal Parking

The act of parking a vehicle in a restricted or unauthorized location, which is against the law and may result in fines.

Office Building

A structure designed for and occupied by one or more businesses or professionals.

New Equipment

Newly purchased or manufactured tools, machinery, or other apparatus intended for use in various industries or businesses.

Cost Recovery Deduction

A tax deduction that allows taxpayers to recover the cost of property or assets over time through depreciation or amortization.