The number of weekly compoundings per year is 52. The periodic interest rate can be expressed as APR/m. If prices rise by 8% and your salary increases by 6%, you will experience a gain in purchasing power. Real interest rate is defined as the percentage change in the purchasing power of dollars.
Added by Alan A.
Step 1
Step 1: Calculate the periodic interest rate (APR/m) using the formula: APR/m = (1 + annual interest rate)^(1/number of compoundings per year) - 1 In this case, the number of compoundings per year is 52. Show more…
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