An investor can earn a 6.7% nominal rate of return, but inflation is expected to be 3%. If the individual invests $3,000 per year for 25 years, the real future value of this investment is ________. (All investments occur at year-end).

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Quizplus · Accepted Answer

Real Rate of Return = (1.067/1.03) - 1 = 0.035922 or 3.5922%
Calculator entries are N = 25, I/Y = 3.5922, PV = 0, PMT = −3000, CPT FV → 118,293.15

An Investor Can Earn a 6