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Sara and Branden each receive $30,000 from their great-aunt. Sara is worried about inflation over the next 4 years, and decides to place her money
Sara and Branden each receive $30,000 from their great-aunt. Sara is worried about inflation over the next 4 years, and decides to place her money into an inflation protected account earning a real interest rate of 2.6% per annum compounded monthly On the other hand, Branden thinks the inflation rate will be low over the next 4 years, so decides to place his money into a regular account earning force of interest of 6.4%. If the actual annual effective rate of inflation turns out to be 3.1%, calculate the ratio of Sara's purchasing power to Branden's purchasing power. Answer to 3 decimal places. Number What would the annual effective rate of inflation need to be for the purchasing powers to be equal? Answer as a decimal to 4 places. Number
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