What is commonly referred to rate of return on

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Reference no: EM132028507

At time zero the investor invests $10,000 and sells the investment at year-end for $10,900. Assume the consumer prices rise 2% over the year.

1. What does it cost at t=1 to purchase the goods that could of been purchased at t=0?

2. How many dollars, in excess of the inflated cost calculated in #1, does the investor have available for consumption at t=1

3. These excess dollars would have been purchased goods that cost how much at t=0

4. This investment return has enabled what percentage increase in "real" consumption over what could have been consumed at t=0

5. What is commonly referred to "rate of return" on the above investment (the "nominal rate")?

Reference no: EM132028507

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