Question

The cpi was 220 in 2012 and 231 in 2013. phil borrowed money in 2012 and repaid the loan in 2013. if the nominal interest rate on the loan was 10 percent, then the real interest rate was?

Answer 1

The real interest rate = 5%

Inflation rate = (CPI 2013 - CPI 2012) / CPI 2012

= (231 - 220) / 220

= 11 / 220

= 0.05 or 5%

Real interest rate = nominal interest rate - inflation rate

= 10% - 5%= 5%

Hence, the real interest rate is 5%

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Once you have submitted the application, your lender will contact you for additional information, including your credit history and other relevant details. After reviewing this information, the banker may authorize or decline your loan request according to their discretion. If approved, you will then need to provide documentation such as an applicant profile form (IFS), proof of income/employer verification letter(s), bank statement showing funds available in account etc., before closing the transaction.

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