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Determining the nominal interest rate

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Reference no: EM131209476

You are planning to invest $2500 today for 3 years at a nominal interest rate of 9% with annual compounding

a. What would be the future value of your investment?

b. Now assume that inflation is expected to be 3% per year over the same 3 year period. What would be the investments FV in terms of purchasing power?

c. What would be the investments FV in terms of purchasing power if inflation occurs at a 9% annual rate?

Reference no: EM131209476

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