si fin w3 1 exam ans - SI cfw collaborative peer-led FIN 300 groupstudy structured EXAM 1 STUDY GUIDES MATH ANSWERS 9 Nominal rate = real rate expected

si fin w3 1 exam ans - SI cfw collaborative peer-led FIN...

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This material is produced by the SI Program at Arizona State University student success .asu.edu { collaborative peer-led structured FIN 300 SI group study EXAM 1 STUDY GUIDE S MATH ANSWERS 9. Nominal rate = real rate + expected inflation 9.2% = real rate + 3.7% Real rate = 9.2% - 3.7% = 5.5% 10. Original loan amount = $650,000. Total amount paid to bank = 30 yrs * 12 mo/yr * $1,986.11 = $715,000 Amount paid in interest = $65,000 = $715K - $650K Interest rate = amount paid in interest / loan amount. $65,000/$650,000 = .1 = 10% 10% is the nominal rate (the rate you see) the bank charges you. If expected inf is 5%, the real rate of interest is 5% 15. There s some rounding error in there, but your answer should be close to this EBT $16,789,050 Bracket
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