Book Print Problem 18-08 (algo) On January 1, 2012, Albert invested $20,000 at 5 percent interest per year for three years. The CPI (times 100) on January 1, 2012, stood at 100. On January 1, 2013, the CPI was 104 on January 1, 2014, it was 110; and on January 1, 2015, the day Albert's investment matured, the CPI was 114. Find the real rate of interest earned by Albert in each of the three years and his total real return over the three-year period. Assume that interest earnings are reinvested each year and themselves earn interest. (Hint Calculate inflation and real interest for each year and then calculate it for the three years as a whole.) Instructions: Enter your responses rounded to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Real rate of interest eferences Year 2012 2013 % % % 2014 Total real rate of return: %
Book Print Problem 18-08 (algo) On January 1, 2012, Albert invested $20,000 at 5 percent interest per year for three years. The CPI (times 100) on January 1, 2012, stood at 100. On January 1, 2013, the CPI was 104 on January 1, 2014, it was 110; and on January 1, 2015, the day Albert's investment matured, the CPI was 114. Find the real rate of interest earned by Albert in each of the three years and his total real return over the three-year period. Assume that interest earnings are reinvested each year and themselves earn interest. (Hint Calculate inflation and real interest for each year and then calculate it for the three years as a whole.) Instructions: Enter your responses rounded to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Real rate of interest eferences Year 2012 2013 % % % 2014 Total real rate of return: %
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Print
Problem 18-08 (algo)
On January 1, 2012, Albert invested $20,000 at 5 percent interest per year for three years. The CPI (times
100) on January 1, 2012, stood at 100. On January 1, 2013, the CPI was 104 on January 1, 2014, it was 110;
and on January 1, 2015, the day Albert's investment matured, the CPI was 114. Find the real rate of
interest earned by Albert in each of the three years and his total real return over the three-year period.
Assume that interest earnings are reinvested each year and themselves earn interest.
(Hint Calculate inflation and real interest for each year and then calculate it for the three years as a
whole.)
Instructions: Enter your responses rounded to one decimal place. If you are entering any negative
numbers be sure to include a negative sign (-) in front of those numbers.
Real rate of interest
eferences
Year
2012
2013
%
%
%
2014
Total real rate of return:
%
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