A music composer deposits $5,000 into an investment that earns an annual interest rate of 5.8%. If the current rate of inflation is 1.7%, what is the real rate of return on the investment? Round to the nearest hundredth of a percent.

A music composer deposits $5,000 into an investment that earns an annual interest rate of 5.8%. If the current rate of inflation is 1.7%, what is the real rate of return on the investment? Round to the nearest hundredth of a percent.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 10P

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Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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