Suppose that lenders want to receive a real rate of interest of 5 percent, and that they expect inflation to
remain steady at 2 percent in the coming years. based on this, lenders should charge a nominal interest rate of:
a. 2 percent.
b. 3 percent.
c. 5 percent.
d. 7 percent.

The answer is: D) 7 percent

Explanation:

Real interest rates are nominal interest rates discounted by inflation. To calculate them we just simply deduct inflation from nominal interest rate: Nominal interest rates - inflation rate = real interest rate.

For this case the nominal interest rate = real interest rate +  inflation rate = 5% + 2% = 7%

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.