Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn

Exercise 16

Assume that you borrow $5,000 and pay back the $5,000 plus $250 in interest at the end of the year. Assuming no inflation, what is the real interest rate What would the interest rate be if the $250 of interest had been discounted at the time the loan was made What would the interest rate be if you were required to repay the loan in 12 equal monthly installments