X Corp would like to borrow from Y Corp. The risk-free rate is 6% with a current

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X Corp would like to borrow from Y Corp. The risk-free rate is 6% with a current inflation rate of 2%. In the following year, the inflation rate will increase by 1%. How much is the interest rate that Y should impose on X?

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Corporate Finance

ISBN: 978-0077861759

10th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Posted Date: Sep 21, 2022 03:50 AM

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X Corp would like to borrow from Y Corp. The risk-free rate is 6% with a current

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Expert Answer:

The interest rate that Y should impose on X is 7 This is because the riskfree rate is 6 and the infl... View the full answer

Corporate Finance

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