Suppose you invest $130,000 today and in 2 years have $200,000. At the time of your...

Question

Question

Answer 1

Answer #1

nominal annual rate of return

=(FV/PV)^(1/n)-1

=(200000/130000)^(1/2)-1

=24.03%

inflation rate=(186/109)^(1/2)-1=30.63%

real annual rate of return=((1+24.03%)/(1+30.63%))-1=-5.05%

Answer 2

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