ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which equation can be used to calculate the “real value” of a $5000 investment with an interest rate of 5.2% p.a. compounded quarterly for 5 years, the average rate of inflation was 1.9% over this period. [1 pt]
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Explanation:
Detailed explanation-1: -The real rate of return formula is: (1+NominalRate) ÷ (1+InflationRate)-1. This calculation determines the cash value of your investment after accounting for the impact of inflation and taxes.
Detailed explanation-2: -An investment of $1, 000 made today will be worth $1, 480.24 in five years at interest rate of 8% compounded semi-annually.
Detailed explanation-3: -Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13, 000.
Detailed explanation-4: -The future value of $1, 000 one year from now invested at 5% is $1, 050, and the present value of $1, 050 one year from now assuming 5% interest is earned is $1, 000.
There is 1 question to complete.