20. Growing annuities

Annuities are a series of constant cash flows that have been received over a certain period of time. However, not all annuities are created equal. Some annuities adjust the payments based on certain macroeconomic factors.

Growing annuities are a series of payments that grow at a ??? rate.

-constant

-variable

You invested in an aggressive growth fund and expect to earn 19.08% annually over the next five years. However, due to strong growth, inflation is expected to be 9.45%. What should be your expected real rate of return?

-8.80%

-6.60%

-9.68%

-10.56%