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On Jan 1, 2022 Sam has a net worth of $165,000.00. His net inflation is running at 8.440% annually. How many years unti $150,000.00? O a. 4 years O b. 8 years O C. O d. 11 years 1 years

On Jan 1, 2022 Sam has a net worth of $165,000.00. His net inflation is running at 8.440% annually. How many years unti $150,000.00? O a. 4 years O b. 8 years O C. O d. 11 years 1 years

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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4. the math of interest. please indicate if you are unsure or totally sure about the answer

On Jan 1, 2022 Sam has a net worth of $165,000.00. His net worth grows at an effective annual rate of 5.570%, but inflation is running at 8.440% annually. How many years until his net worth (in constant dollars) is less than $150,000.00? 4 years b. 8 years a. C. 11 years d. 1 years 9 years e. Certainty OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
Transcribed Image Text:On Jan 1, 2022 Sam has a net worth of $165,000.00. His net worth grows at an effective annual rate of 5.570%, but inflation is running at 8.440% annually. How many years until his net worth (in constant dollars) is less than $150,000.00? 4 years b. 8 years a. C. 11 years d. 1 years 9 years e. Certainty OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
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Due to inflation value of money decreases if the inflation is more than interest rate because purchasing power decreases with time.

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