Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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If inflation averages 4 percent per year, how much purchasing power will
$1.00 lose in 10 years?
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- . Inflation is expected to average 2.4% per year for the next 44 years. How much money will be required, 44 years from now, to buy the same amount of goods and services as $1 does today?arrow_forwardYou deposited $10,000 today into a saving account for 5 years with a market rate of 8% per year. The expected inflation rate for the next 5 years is 2% per year. The purchasing power of the amount of money accumulated in this account 5 years from now is equivalent to the purchasing power of how much money today? O 14,028 O 13,308 O 12,484 O 10,980arrow_forwardYou will receive $1000 from a savings bond in3 years from now. The nominal interest rate is 8% and the rate of inflation is 2%. What is the real value of the $1000 that you receive 3 years from now in terms of today's dollars?arrow_forward
- You found an investment opportunity to deposit $15,000 every year for 10 years into an account earning8%. You estimate general inflation to be 3% per year. What is the dollar value of your account at the endof 10 years in today’s real dollars?arrow_forwardHow many years will it take for an investment to double itself if the interest rate is 10%?arrow_forwardI am expecting the inflation to be 3% next year. In order to increase my purchasing power by 4% next year, how much return should i earn from my investements next year?arrow_forward
- Consider the following statement: "If you are 20 years of age and save $1.00 each day for the rest of your life, you can become a millionaire." Assume that you live to age 80 and that the annual interest rate is 12%. Under these specific conditions, we compute the future compound amount (F): $2,727,149. If inflation is expected to average 3% per year over the next 60 years, your purchasing power will be less than $2,727,149. a. When f= 3% per year, what is the purchasing power of this future sum of money in today's dollars when you reach age 80? b. Repeat Part (a) when inflation averages 1% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 1% per year. Click the icon to view the interest and annuity table for discrete compounding when /=3% per year. a. The purchasing power is $ thousand. (Round to the nearest whole number.) b. The purchasing power is $ thousand. (Round to the nearest whole number.)arrow_forwardAt an effective annual interest rate of 10 percent, how many years will it take a given amount to triple in value? 6.34 8.74 10.26 11.53 13.95arrow_forwardIf the inflation rate is 6% per year, how many (future) dollars will be required 10 years from now to buy the same things that $15,000 buys now? Solve manually pleasearrow_forward
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