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If you lend your cousin $100 to be paid back in a year at 5% interest,
In one year, what amount will you earn if there is no inflation vs if there is 3% inflation?
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- Suppose you start saving for retirement when you are 45 years old. You invest $5,000 the first year and increase this amount by 3% each year to match inflation for a total of 20 years. The interest rate is 10% per year. How much money will you have saved when you are 65 years old?Ten years ago, an item cost $2,500. The rate of inflation for the first 4 years was 4%, during the next 3 years, 6%; and for the last 3 years, 9%. Assuming that increases in price were due to inflation alone, what would the item cost now?Alfredo wants to know how much he must put in a bank account today to achieve an amount equal to $20,000 in today's value (year 0) in 14 years. Inflation is 8%. The interest rate offered by the bank is 5% per year. a) Calculate the conversion to current dollars of the $20,000 $__________ . b) How much should you deposit today in the bank to achieve your goal? $________
- The inflation rate over a 10-year period for an item that now costs $1000 is shown in the following table. (a) What will be the cost at the end of year10? (b) Do you get the same cost using an average inflation rate of 5% per year through the 10-year period? Why?Samantha receives a starting salary offer of $60,000 for Year 1. If inflation is 3% each year, what must her salary be to have the same purchasing power in Year 10? Year 20? Year 30? Year 40?Michelle has won a prize that will pay her $1000 per year, starting one year from today,for 15 years. Inflation is expected to be 3% per year for the next 15 years, and her interest rate is 5% per year. What is the present value of this prize today? (Treat the 3% inflation as a negative 8, thus g = -3%, and i is 5%)
- If the inflation rate is 4.95% compounded annually, how long will it take for prices to double? yearsThe CPI has risen from 130 to 115, what is the inflation rate? 10% 20% 15% 13%Prices for fresh fruit went up 9% last year and 3% this year. What is the average inflation rate percentage for fresh fruit over the 2-year period? Enter your answer as a percentage rounded to the nearest tenth of a percent.
- An economist has predicted that for the next 5 years, the U.S. will have a 2.5% annual inflation rate, followed by 5 years at a 3.5% inflation rate. This is equivalent to what average price change per year for the entire 10-year period?The first year Jeff paid for a membership at his gym, the fee was $440.00. He renewed his membership three times; in 2002 for $480.00, in 2004 for $500.00, and again in 2006 for $530.00. What is the overall rate of inflation for Jeff's gym membership? Question 4 options: 6.6% 3.4% 20.45% 16.66%If you are looking for a 4% real return (inflation-free interest) on your investment, would you be interested in an investment opportunity that produce a 9% return on investment (market interest rate) if the inflation rate is 5%?