On January 1, 2012, Albert invested $10,000 at 6 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 105 on January 1, 2014, it was 110; and on January 1, 2015, the day Albert's investment matured, the CPI was 118. 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. Year 2012 2013 2014 Real rate of interest 10 10 Total real rate of return: 1 %.

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Chapter1: Making Economics Decisions
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On January 1, 2012, Albert invested $10,000 at 6 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 105 on January 1, 2014, it was 110; and on January 1, 2015, the day Albert's investment
matured, the CPI was 118. 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.
Year
2012
2013
2014
Real rate of interest
1.0
1.0
Total real rate of return;
8
%.
Transcribed Image Text:On January 1, 2012, Albert invested $10,000 at 6 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 105 on January 1, 2014, it was 110; and on January 1, 2015, the day Albert's investment matured, the CPI was 118. 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. Year 2012 2013 2014 Real rate of interest 1.0 1.0 Total real rate of return; 8 %.
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