A person's savings eams an effective annual rate of return of 9%. Income tax is paid on the interest earned at a rate of 55%. If the inflation rate is 3% per year, what is the annual after-tax real rate of return? Answer as a percentage, correct to 2 decimals.

A person's savings eams an effective annual rate of return of 9%. Income tax is paid on the interest earned at a rate of 55%. If the inflation rate is 3% per year, what is the annual after-tax real rate of return? Answer as a percentage, correct to 2 decimals.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 37P: Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time...

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Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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