Adelaide Autos agrees to loan at an interest rate of 10.6% in AUD (Australia dollars). Inflation...

Adelaide Autos agrees to loan at an interest rate of 10.6% in AUD (Australia dollars). Inflation is expected to be 5.1% next year. What is the real interest rate of the loan?

Expert Solution

Given,

Interest rate = 10.6%

Inflation rate = 5.1%

Solution :-

Real interest rate = Interest rate - Inflation rate

= 10.6% - 5.1% = 5.5%

jeff jeffy answered 2 years ago

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