At the beginning of 2018 you deposit 1000 compounded annually. The interest rate is floating, i.e. it is changing every year (see data in table).
You know only the total (compounded) rate of inflation on the end of five years, but don’t know the exact rates of inflation of each year.
A) Please calculate average rates of inflation yearly. Use both GEOMEAN function and mathematical calculation of the root.
B) What is the number of total compounded interest on the end of five years?
C) What is the average interest a year (this is also an effective interest)?
D) What is the nominal value of your investment after 5 years?
E) What is the real value of your investment after 5 years? (adjusted to inflation)
 

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Inflation Interest rate 2018 A) ? 5% 2019 ? 6% 2020 ? 3% 2021 ? 7% 2022 Total %, for five years: ? 2% B) 25% % ? Inflation Interest rate 2018 A) ? 5% 2019 ? 6% 2020 ? 3% 2021 ? 7% 2022 Total %, for five years: ? 2% B) 25% % ?

Answer rating: 100% (QA)

A Calculate the average rates of inflation yearly Using the GEOMEAN function Average inflation rate ... View the full answer