His firm recently loaned Arlington Enterprises $22,440,000 million for one year at an interest rate of 12.00%. Inflation during the year is expected to be 3.80%.

Answer the following questions to measure the impact of inflation on the real interest payable. (Round all answers to 2 decimal places.)

to. How much interest income will your company receive from the transaction, calculated in the traditional way? Interest income $

b. What is the approximate real interest rate? Approximate real interest rate %

C. What is the actual portion of the interest income? Actual portion of interest income $

d. By how much will interest income be understated due to inflation? Understated interest $

Answer rating: 100% (QA)

a The interest income that the company will receive from the transaction calculated in the tradition... View the full answer