Use of Financial Calculator TI BA II Plus required. Rejean purchased a 20-year 6 percent real return bond for $15 000 and the CPI has increased by 1.5 percent in the first year. What interest payment will Rejean receive in the second year?

Question

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The real return bond adjusts for inflation. The initial interest payment is 6% of $15,000, which is $900. With a 1.5% increase in CPI, the principal is adjusted to $15,225 ($15,000 * 1.015). The second year's interest payment is 6% of $15,225, which is $913.50.

Use of Financial Calculator TI BA II Plus Required