EBK FOCUS ON PERSONAL FINANCE
6th Edition
ISBN: 9781260140965
Author: Kapoor
Publisher: MCGRAW HILL BOOK COMPANY
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Question
Chapter 1, Problem 5P
Summary Introduction
To discuss: The annual earnings.
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A year ago, you invested $1,000 in a savings account that pays an annual interest rate of 6%. What is your approximate annual real rate of return if the rate of inflation was 2% over the year?
A. 6%
B. 4%
C. 2%
D. 3%
If $25,000 is deposited in a 5% savings account and inflation is 3%, what is the value of the account at the end of Year 20 in Year-0 dollars? If the time value of money is 4%, what is the present worth?
How much will $7500 in savings today be worth 5 years from now if it earns 6%, compounded monthly?
a. $11,465
b. $15.091
c. $7.955
d. $247,408
e. $7,686
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