Bill expects the inflation rate

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Bill expects the inflation rate to be 4% per year over the next 5 years and Bill just borrowed $25,000 on a fixed interest rate loan over 5 years at an interest rate of 7.5% to buy a car. It turns out, however, that the inflation rate each year is not 4% per year but 6% per year. As a result, Bill actually has to pay a real interest rate on his car loan of ______

Reference no: EM13984156

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Bill expects the inflation rate : Bill expects the inflation rate to be 4% per year over the next 5 years and Bill just borrowed $25,000 on a fixed interest rate loan over 5 years at an interest rate of 7.5% to buy a car. It turns out, however, that the inflation rate each year is no..

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