You need to earn 6% annul real rate of return and, in addition, you need to keep up with the annual inflation rate. Exactly 4 years ago, the expected inflation rate was 2% per year. At that time, you decided to invest in a 7-year annuity with $20,000 deposited at the end of each year. Now, right after you made the 4th deposit, the expected annual inflation rate for the next 3 years is 3% per year. To keep your investment goal of 6% real annual return and keeping up with the new inflation rate, how much more each year for the last 3 years you will need to deposit in addition to the $20,000 per year to reach that goal?
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Ответ:
"4,000" is the appropriate option.
Explanation:
Given:
Real interest rate,
= 6%
Inflation rate,
= 2%
Annual deposit,
= $20,000
Now,
The nominal interest rate will be:
=![Real \ interest \ rate+Inflation \ rate](/tpl/images/1344/7071/9b941.png)
=![6+2](/tpl/images/1344/7071/aaeaf.png)
=
(%)
As per the annual deposit, I was making,
=![20000\times 0.6](/tpl/images/1344/7071/d7133.png)
=![1200 \ every \ year](/tpl/images/1344/7071/7a917.png)
Inflation rate rise 3% i.e.,
=![2+3](/tpl/images/1344/7071/884db.png)
=
(%)
Just to earn 1200, I have to:
=![\frac{1200}{0.05}](/tpl/images/1344/7071/3dd08.png)
=![24,000](/tpl/images/1344/7071/691d0.png)
Thus the above is the appropriate answer.
Ответ:
Cool Christmas Giveaway of Free Points! Anyways Happy Holidays! :)