Suppose the Nominal Interest Rate Is 10 Percent

Suppose the nominal interest rate is 10 percent. The rate of inflation has been 4 percent and is expected to continue at 4 percent in the future. The real interest rate, which determines the firm's decision to purchase capital, is therefore

A) 4 percent.
B) 6 percent.
C) 10 percent.
D) 14 percent.
E) indeterminate.