Drew Wants to Borrow $500 from Bob

Multiple Choice

Drew wants to borrow $500 from Bob. Bob wants to make 4% real return on his money, so they both agree on an 4% interest rate paid next year. Both don't anticipate the -5% inflation next year. In this case

A) Drew will pay an 4% real interest rate.
B) Bob is better off.
C) Drew will pay an 13% nominal interest rate.
D) all of the above