SayNoToPistons
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I am also having problem with a question involving interest and inflation. This is the question:
An investor lends $15,000 today to be repaid in a lump sum at the end of 10 yrs with an interest rate of 8% compounded annually.
A: what is the real rate of return if the general price inflation is 6% annual?
B: What is the $15,000 repaid worth in today's dollars?
Interest and inflation alone is easy to deal with if only one of each is computed. Though the mixture of both is throwing me off a bit.
An investor lends $15,000 today to be repaid in a lump sum at the end of 10 yrs with an interest rate of 8% compounded annually.
A: what is the real rate of return if the general price inflation is 6% annual?
B: What is the $15,000 repaid worth in today's dollars?
Interest and inflation alone is easy to deal with if only one of each is computed. Though the mixture of both is throwing me off a bit.