What actual interest rate must you earn

Reference no: EM131506629

Question: 1. A recent college graduate has received the annual salaries shown in the following table over the past four years. During this time, the CPI has performed as indicated. Determine the annual salaries in year-zero dollars (b = 0), using the CPI as the indicator of general price inflation.

End of Year Salary (A$) CPI

1 $34,000 2.4%

2 36,200 1.9%

3 38,800 3.3%

4 41,500 3.4%

2. If you want to receive a 7% inflation-free return on your investment and you expect inflation to be 9% per year, what actual interest rate must you earn?

Reference no: EM131506629

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