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With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6 percent. But, if the rate of inflation was anticipated to be 4 percent, the bank would most likely charge the firm an annual interest rate of:

Respuesta :

Answer:

The annual interest rate is 10%

Explanation:

The computation of the annual interest rate is shown below:

= annual interest rate + expected inflation rate

= 6% + 4%

= 10%

We simply added the  annual interest rate and  expected inflation rate so that the rate that should be charged could come and the same is to be considered

hence, the annual interest rate is 10%

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