Your starting salary is $68,000. You deposit 8% into your retirement account each year which earns 6% interest. Your salary increases by 4.5% each year and inflation is expected to be 4% per year. a. What is the value of your retirement account at the end of 20 years? b. What is the real interest rate of the retirement account?

Your starting salary is $68,000. You deposit 8% into your retirement account each year which earns 6% interest. Your salary increases by 4.5% each year and inflation is expected to be 4% per year. a. What is the value of your retirement account at the end of 20 years? b. What is the real interest rate of the retirement account?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Money Growth And Inflation

Section22.2: The Costs Of Inflation

Problem 2QQ

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