A loan of $100,000 is taken out which requires an annual interest payment of 6% of the outstanding principal. If no principal payments are made over time and inflation is 3.1% per year, the payment at the end of year four is?
1. A real dollar cash flow of $6,000 and an actual dollar cash flow of $5,310.
2. An actual dollar cash flow of $6,000 and a real dollar cash flow of $5,310.
3. An actual dollar cash flow of $6,779 and a real dollar cash flow of $6,000.
4. A real dollar cash flow of $5,310 and an actual dollar cash flow of $6,779.
A loan of $100,000 is taken out which requires an annual interest payment of 6% of the outstanding principal. If no principal payments are made over time and inflation is 3.1% per year, the payment at the end of year four is?
1. A real dollar cash flow of $6,000 and an actual dollar cash flow of $5,310.
2. An actual dollar cash flow of $6,000 and a real dollar cash flow of $5,310.
3. An actual dollar cash flow of $6,779 and a real dollar cash flow of $6,000.
4. A real dollar cash flow of $5,310 and an actual dollar cash flow of $6,779.
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