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Q. Relation between nominal and real interest rate?
Relation between nominal interest rate, real interest rate and inflation
If we signify the nominal interest rate by R, real rate by r and expected inflation by pe then real interest rate is defined by:
r = R-pe or R=r+pe
Suppose a company is considering two independent projects, Project A and Project B. The cash outlay for Project A is $14,000. The cash outlay for Project B is $20,000. The company
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