I am having a hard time figuring this out. I don't expect you to just give me the answers, what I really want is help on HOW to figure out the before tax real interest rate and the after tax real interest rate. I already understand how to figure out the real interest rate and the nominal interest rate. Where do I go from here? How do I go about solving this?
If the tax rate is 40 percent, compute the before tax real interest rate and the after tax real interest rate in each of the following cases.
a) The nominal interest rate is 10 percent and the inflation rate is 5 percent.
If the tax rate is 40 percent, compute the before tax real interest rate and the after tax real interest rate in each of the following cases.
a) The nominal interest rate is 10 percent and the inflation rate is 5 percent.