Homework Answers
| Real interest rate =((1 + Nominal interest rate) / (1+ Inflation rate))-1 | |||||
| Real interest rate = ((1+13%)/(1+2%))-1 = 10.78% | |||||
| FV = PV * (1+interest rate)^number of years | |||||
| Real Future value = 500*((1+10.78%)^10) = $ 1,391.82 | |||||
| Real Future value = $ 1,391.82 |
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