Miss Universe contestant who won a reward of 500,000$ invested it in the bank for 5 years at 10% interest compounded quarterly. If the rate of inflation is 12% continuosly for 5 years, a) Did she lost or earn money in the form of interest? b) How much did she lost or earn?

Miss Universe contestant who won a reward of 500,000$ invested it in the bank for 5 years at 10% interest compounded quarterly. If the rate of inflation is 12% continuosly for 5 years, a) Did she lost or earn money in the form of interest? b) How much did she lost or earn?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Question

A Miss Universe contestant who won a reward of 500,000$ invested it in the bank for 5 years at 10% interest compounded quarterly. If the rate of inflation is 12% continuosly for 5 years,

a) Did she lost or earn money in the form of interest?
b) How much did she lost or earn?

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