Solution-What was the real after tax interest rate for the

What was the real after tax interest rate for the first year

Reference no: EM132531018

Jack invested $ 1000 for two years at i(1) = 5%. The annual inflation rate for the first year was 2% and 3% for the second year. Assume a Macbook was worth $ 1030 and the price was increasing at the rate of inflation each year.

(a) Can Jack afford to the Macbook after two years?

(b) If he paid tax at a rate of 50%, can Jack buy the Macbook using his investment at the end of two years?

Reference no: EM132531018

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What was the real after tax interest rate for the first year

Reference no: EM132531018

Reference no: EM132531018

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