In the beginning of last year, you spent VND15 million to by Vinamilk shares. At the

end of last year, you sold this stock and earned VND 18 million. Capital gains are

subject to a tax rate of 20%.

a. You expect last year's average inflation to be 5%. What is the after-tax real

interest rate? What is your after-tax real capital gain?

b. Assume that last year's actual inflation rate was 7%. What is the after-tax real

interest rate? What is your after-tax real capital gain?

c. What do you think about the impact of inflation on capital gains and tax paid?

Thanks for your answers !