Earlier today, you invested $1,000 into an investment that guarantees a 5% rate of return (annual compounding) for 20 years. How much money do you expect to have at the end of the 20 years (nominal dollars)?

 If, over the ext. 20 years, inflation runs at 3% per year (annual compounding), what do you expect the purchasing power of that money be when you receive it at the end of 20 years (real dollars)

 What are you expecting your real rate of return to be (per year) over the next 20 years based on the above information? 

 Nominal dollars in 20 years ______

 Real dollars in 20 years ______

 real rate of return per year ______

Answer rating: 100% (QA)

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