I think the answer is C is this correct? And if not can I get some help?

If eh = hg and hg=16, find the diameter of k

Precalculus question, image attached.

Frank is lending $1,000 to sarah for two years. frank and sarah agree that frank should earn a real return of 4 percent per year. instructions: a. the cpi (times 100) is 100 at the time that frank makes the loan. it is expected to be 113 in one year and 127.7 in two years. what nominal rate of interest should frank charge sarah?