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Suppose you invest $15,000 in an account paying 4% interest per year and you expect inflation to be 2% per year for the next 18
Suppose you invest $15,000 in an account paying 4% interest per year and you expect inflation to be 2% per year for the next 18 years. a) What will be the balance in the account after 18 years? How much of this balance corresponds to interest on interest? b) What real interest rate do you receive over this time period? c) What will the purchasing power of your account balance be in 18 years (in todays values)
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