Business, 04.03.2022 03:30 reycaden

Initially, Lucia earns a salary of $600 per year and Kenji earns a salary of $400 per year. Lucia lends Kenji $200 for one year at an annual interest rate of 12% with the expectation that the rate of inflation will be 10% during the one-year life of the loan. At the end of the year, Kenji makes good on the loan by paying Lucia $224. Consider how the loan repayment affects Lucia and Kenji under the following scenarios. Suppose all prices and salaries rise by 10% (as expected) over the course of the year. In the following table, find Lucia's and Kenji's new salaries after the 10% increase, and then calculate the $224 payment as a percentage of their new salaries.

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Initially, Lucia earns a salary of $600 per year and Kenji earns a salary of $400 per year. Lucia le...

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