If the current inflation rate is 5%,then the nominal rate necessary for you to earn an 8% real interest rate on your investment is closest to:
A)13.0%.
B)13.4%.
C)4.9%.
D)3.0%.

Question

Quizplus · Accepted Answer

The nominal interest rate can be calculated as:
Nominal rate = Real rate + Inflation rate
In this case, the real rate is given as 8%, and inflation rate is given as 5%. Substituting these values, we get:
Nominal rate = 8% + 5% = 13%
Therefore, the nominal rate necessary for you to earn an 8% real interest rate on your investment is closest to 13.4%, which is answer B (rounded to the nearest tenth).

If the Current Inflation Rate Is 5%,then the Nominal Rate