Assume you lend someone $1 million a year for the next 10 years, and they tell you they will give you $2 million a year for the following 10 years. a) if the interest rate for the next 20 years is expected to be 6% should you take this deal? b) the expected inflation rate is 3% per year over the next 20 years. Based on this info, show exsctly how your calculations changes and explain why?

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.