(inflation and interest rates) you're considering an investment that you expect will produce a return of 8 percent next year, and you expect that your real rate of return on this investment will be 3 percent. what do you expect inflation to be next year?

The inflation rate is expected to be 4.8544% next year.

Explanation:

The data we have on this problem is:

The nominal interest rate is 8%.

The real interest rate is 3%.

Knowing the formula for the real interest rate

where R is the real interest rate, r is the nominal interest rate and i is the inflation rate, we can deduce the formula for the inflation rate as follows:

Step 1: multiply both members of the equation by (1+i)

Step 2: divide both members of the equation by (1+R)

Step 3: substract 1 from both members of the equation

Step 4: replace the given values in the equation

The inflation rate is expected to be 4.8544% next year.

hello the answer is d