What has been your real’ annual interest rate

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Reference no: EM131097258

You invested $10,000 on January 1, 2014, at 7 percent interest compounded annually. You have not touched the investment since that date. You are planning to take your money and close out the investment on January 1,2024.

a. If average in?ation is 3.7 percent, what has been your ‘‘real’’ annual interest rate?

b. At the time you originally invested, there was a boat you admired costing $8,000. Over the years, boats are in?ating at a rate of 7 percent. You were also interested in a marine navigation system costing $4,000; similar systems are dropping in price at a 2 percent rate. If you decide to buy one of each when you close out the account, how much will the purchases cost you?

c. How much money will you have left over (or be short) after your purchases?

Reference no: EM131097258

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