If the Nominal Interest Rate Is 15 Percent and the Inflation

question 48

Multiple Choice

If the nominal interest rate is 15 percent and the inflation rate is 5 percent,then what is the real interest rate?

• A)10 percent
• B)20 percent
• C)3 percent
• D)5 percent

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Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life, representing what it could be sold for or scrapped.

Technologically Obsolete

Refers to products, services, or technology that have become outdated or no longer maintain a competitive advantage due to advancements in technology.

Simple Rate Of Return

A method to evaluate an investment's efficiency by dividing the annual incremental net operating income by the initial investment cost.

Cash Operating Costs

Expenses a company incurs during its day-to-day operational activities that require cash payment.