Lets assume that the real rate of return is a constant 20%. If the rate of inflation is 50%, what would be the nominal value of your investment of $100 by the end of the year? Assuming income taxes to the tune of 40%, compute the real value of your investment after taxes on nominal income have been paid at the end of the year? Now contrast the same scenario but without any inflation, what would the value of your investment be at the end of the year. What lesson can we learn comparing these two scenarios?