1. Quintan's grandfather convinces him to hold his savings of $10,000 in cash . Assuming the average...
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1. Quintan's grandfather convinces him to hold his savings of $10,000in cash. Assuming the average inflation rate is 3.45% every year, what will the real value (inflation adjusted) of Quintan's cash be at the end of five years?
2. Quintan decides to disregard his grandfather's advice and invest his $10,000 into the stock market. Quintan researches inflation rates, finding the historical average is 3.26% per year. He expects his small, diversified portfolio to make 7.31% in interest annually. If Quintan's assumptions about inflation (3.26%) and his returns (7.31%) are true, what will be the real value of his portfolio at the end of 5 years?
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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