The value of an investment of $1000 earning 6% compounded annually is

where I is the annual rate of inflation and R is the tax rate for the person making the investment. Calculate V₁(0.03, 0.28)
and V_R(0.03, 0.28). Determine whether the tax rate or the rate
of inflation is the greater "negative" factor in the growth of
the investment.

Transcribed Image Text:

V(I, R) = 1000 1 + 0.06(1 R) 1 + I 10