Compute the amount of interest attributable to real rate

Reference no: EM13261191

Imagine you borrow $1,100 from your roommate, agreeing to pay her back $1,100 plus 11 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 7.25 percent. What is the total dollar amount you will have to pay her back in a year? Compute the amount of interest attributable to the real rate of interest.

Reference no: EM13261191

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