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PLEASE EXPLAIN DETAILSLet's assume that the real rate of return is a constant 2 0 % . If inflation is 5 0 % , then
PLEASEEXPLAIN DETAILSLet's assume that the real rate of return is a constant If
inflation is then the nominal rate of return is because
Therefore, you get $ over a one year
period for a $ investment. Assuming income taxes to the tune of
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? marks
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