If the rate of inflation is 5 %, what nominal interest rate is necessary for you to earn a 2.4 % real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.)

Use fisher equation to solve this question. It is an equation that shows the relationship between nominal interest rate and real interest rate in consideration to inflation rate.

Fisher equation;

Nominal = [ (1+ Real rate) *(1+inflation)] -1

Nominal = [(1+0.024) *(1+0.05)] -1

Nominal = (1.024* 1.05 ) -1

Nominal = 1.0752 -1 = 0.0752 or 7.52%

Therefore, the nominal rate is 7.52%

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If the rate of inflation is 5 %​, what nominal interest rate is necessary for you to earn a 2.4 % real interest rate on your​ investment? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.)

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If the rate of inflation is 5 %, what nominal interest rate is necessary for you to earn a 2.4 % real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.)