To analyze the situation, we need to calculate the nominal interest amount Simon has to pay and then adjust that value considering the inflation rate to find the real value of the loan and interest payments.
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Calculating the nominal interest:
- Simon borrowed R10,000.
- The fixed interest rate is 20%.
- Therefore, at the end of 2023, the total amount he owes (loan + interest) will be: \[ \text{Total amount owed} = \text{Principal} + \text{Interest} = R10,000 + (R10,000 \times 0.20) = R10,000 + R2,000 = R12,000 \]
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Adjusting for inflation:
- The inflation rate at the end of 2023 was 25%.
- To find the real value of money, we need to adjust the total amount owed for inflation: \[ \text{Real value of R12,000 in today’s terms} = \frac{\text{Nominal value}}{1 + \text{inflation rate}} = \frac{R12,000}{1 + 0.25} = \frac{R12,000}{1.25} = R9,600 \]
Therefore, the real value of his loan plus interest payments, after adjusting for inflation, has effectively decreased from R12,000 to R9,600.
So, inflation has been beneficial to Simon, and the real value of his loan plus interest payments changed to R9,600.
Thus, the correct answer is:
beneficial; R9 600.