Real Rate of Return Assignment | Homework For You
May 23rd, 2020
- Bart Sampson loves butterfingers. He has $100 that he can spend on butterfingers that cost $0.50. Alternatively, he could invest the $100 in an account that pays 7.61% nominal interest. Economists have agreed that they expect a 2% rate of inflation over the next year.
- How many butterfingers can Bart purchase today?
- How much money will Bart have at the end of the year if he invests his $100 in the account that pays 7.61% interest?
- Given the expected 2% inflation, how much would you expect a butterfinger to cost at the end of 1 year?
- How many butterfingers can Bart purchase in one year if he invests his $100 in the account?
What is Bart’s real rate of return over the year? (measured in the amount of additional butterfingers that he can buy) Get Finance homework help today
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