Real interest rate at retirement

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Reference no: EM13811296

You will almost certainly be a millionaire by the time you retire in 45 years. Bad news: The inflation rate over your lifetime will average about 3.7%.

a. What will be the real value of $1 million by the time you retire in terms of today’s dollars?

b. What real annuity (in today’s dollars) will $1 million support if the real interest rate at retirement is 2.7% and the annuity must last for 15 years?

Reference no: EM13811296

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