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(30 points) The U.S. stock market has returned an average of about 9% per year since 1900. This return works out to a real return
(30 points) The U.S. stock market has returned an average of about 9% per year since 1900. This return works out to a real return (i.e., adjusted for inflation) of approximately 6% per year. a. (10 points) Nancy decided to invest $100,000 in the U.S. stock market. If she earns 6% a year on her investment, how much real purchasing power will Nancy have in 30 years? b. (15 points) Andrew decided to invest $5,000 every year for 20 years in the U.S. stock market, how much real purchasing power will Andrew have at the end of 30 years? The interest rate is 6% per year. c. (5 points) Both Nancy and Andrew are investing a total of $100,000. Why is their purchasing power different at the end of year 30
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