Find the inflation-free interest rate

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Reference no: EM131618651

Given that the general inflation rate is 3% and market interest rate is 4%.

i. Find the inflation-free interest rate.

ii. There is a series of five constant dollar payments, beginning with $25,000 EOY1 and increasing at the rate of 2% per year. Calculate the equivalent present worth of the series. Use the inflation-free interest rate found in (i).

Reference no: EM131618651

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