Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with interest of 4 percent a year. If the annual inflation rate turns out to be 7 percent, Hint: Future value...

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Extracted text: Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with interest of 4 percent a year. If the annual inflation rate turns out to be 7 percent, Hint: Future value = Present value x (1+ Growth in prices)', where tis the number of years evaluated. Real value of loan repayment = Amount of loan x (1+ Real interest rate)? Instructions: Round your responses to the nearest whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. What is the real rate of interest on the loan? b. What is the real value of the principal repayment? c. Who loses, the debtor or the creditor? Creditor Debtor