On January 1, 2012, Albert invested $8,000 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 108 on January 1, 2014, it was 115; and on January 1, 2015, the day Albert’s investment matured, the CPI was 117. 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 Real rate of interest 2012 % 2013 % 2014 % Total real rate of return: %.
On January 1, 2012, Albert invested $8,000 at 5 percent interest per year for three years. The
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 | Real rate of interest |
| 2012 | % |
| 2013 | % |
| 2014 | % |
Total real
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