Solution: | |
Real rate = ((1+nominal rate)/(1+inflation rate))-1 | 1.42% |
let inflation rate be 'i' | |
0.08=((1+0.26)/(1+i))-1 | |
0.08=(1.26/(1+i))-1 | |
0.08+1=1.26/(1+i) | |
1.08=1.26/(1+i) | |
1.08*(1+i)=1.26 | |
1.08+1.08i=1.26 | |
1.08i=1.26-1.08 | |
1.08i=0.18 | |
i=0.18/1.08 | |
i= | 16.67% |
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