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investment target. What is the nominal cash-flow you would have to deposit in year 10 if inflation turns out to what you expected? O $60,301 O $62,147 O $44,869 O $61,531 $62,147

investment target. What is the nominal cash-flow you would have to deposit in year 10 if inflation turns out to what you expected? O $60,301 O $62,147 O $44,869 O $61,531 $62,147

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You want to have $500,000 in real terms 10 years from now. You expect inflation over that time period to be 3% per year. Your investments eam 5% APR (nominal) compounded annually. Based on your expectations, you construct a growing nominal annuity to meet your investment target. What is the nominal cash-flow you would have to deposit in year 10 if inflation turns out to what you expected? O $60,301 O $62,147 O $44,869 O $61,531 $62,147 $45,785
Transcribed Image Text:You want to have $500,000 in real terms 10 years from now. You expect inflation over that time period to be 3% per year. Your investments eam 5% APR (nominal) compounded annually. Based on your expectations, you construct a growing nominal annuity to meet your investment target. What is the nominal cash-flow you would have to deposit in year 10 if inflation turns out to what you expected? O $60,301 O $62,147 O $44,869 O $61,531 $62,147 $45,785
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