Use the information below to answer the following question(s) .
Barry operates a shop in a resort in an area known for its high inflation rate. The inflation rate for the last few years has been averaging 3 percent a month. His long-term real rate of return is 12 percent, or 1 percent a month. On April 1 he anticipates that real dollar sales during the summer will be as follows:

-Assume that in recent years a global economic crisis has produced a very high annual inflation rate of 25 percent. Kenyan Coffee has decided to use a nominal rate to determine capital budgeting decisions. Its traditional real rate of return is 10 percent. What is the company's nominal traditional rate of return?
A) 0.100
B) 0.250
C) 0.300
D) 0.350
E) 0.375
Correct Answer:
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