Calculate the current value of the index

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1 ) Ten years ago a machine cost $800,000. Now, the same machine costs $1,200,000. Calculate the average rate of inflation per year.

2) An investor bought a tax-free provincial bond, at a cost of $1000 which will pay $50 interest each year for 20 years. The bond will mature in 20 years and return the original $1000. If there is a 2% annual inflation during this period, what real rate of return will the investor receive?

3) A composite price index for the cost of vegetarian foods called eggs, artichokes, and tofu (EAT) was 330 ten years ago and has averaged an annual increase of 12% since. Calculate the current value of the index.

Reference no: EM13184762

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