Question: Hi, please list out the formulas where necessary , graphs where necessary , if the question doesnt require it, its fine not have it but
Hi, please list out the formulas where necessary , graphs where necessary , if the question doesnt require it, its fine not have it but please do put it down if it helps you to explain . Thank you!
Now we're going to re-calculate some of the values from the previous question in nominal rather than real terms. Suppose once again that: the real return averages 6% per year, that you're 22 and you put away 1000 in a tax-exempt ISA and you won't touch the money until you're 70.
- (a)If inflation averages 2% between now and your 70th birthday, how much nominal money would you get from your investment?
- (b)What was the nominal "total interest rate" (in %) that you got over the 48 years? Was this better or worse than the rate that you got in part (b) of the previous question? (i.e. which return would you rather have?)
- (c)Ifyouwanttouseupaconstantrealamountofthemoneythatyousavedinpart(a) each year after you retire, and you expect to live forever, how much can you consume each year?
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