You lend $1,154 to a friend and he agrees to pay you back next year plus...

Question

Question

Answer 1

Answer #1

Real interest rate = (nominal interest - inflation) / (1 + inflation)

= (0.0691 - 0.0234) / (1 + 0.0234)

= 0.044655

Real retun = 1154 * (1+0.044655) = 1205.53

More money = 1205.53- 1154 = 51.53

Answer 2

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