Suppose Damaris is an avid reader and buys only reusable tote bagses. Damaris deposits $3,000 into...

 

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Suppose Damaris is an avid reader and buys only reusable tote bagses. Damaris deposits $3,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a reusable tote bags has a price of $10.00. Initially, Damaris's $3,000 deposit has a purchasing power of reusable tote bagses. For each of the annual inflation rates given in the following table, first determine the new price of a reusable tote bags, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Damaris's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest reusable tote bags. For example, if you find that the deposit will cover 20.7 reusable tote bagses, you would round the purchasing power down to 20 reusable tote bagses under the assumption that Damaris will not buy seven-tenths of a reusable tote bags. Number of Tote bags Damaris Can Purchase after One Year Real Interest Rate 0% Annual Inflation Rate 5% % 8% When the rate of inflation is equal to the interest rate on Damaris's deposit, the purchasing power of her deposit course of the year. over the Suppose Damaris is an avid reader and buys only reusable tote bagses. Damaris deposits $3,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a reusable tote bags has a price of $10.00. Initially, Damaris's $3,000 deposit has a purchasing power of reusable tote bagses. For each of the annual inflation rates given in the following table, first determine the new price of a reusable tote bags, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Damaris's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest reusable tote bags. For example, if you find that the deposit will cover 20.7 reusable tote bagses, you would round the purchasing power down to 20 reusable tote bagses under the assumption that Damaris will not buy seven-tenths of a reusable tote bags. Number of Tote bags Damaris Can Purchase after One Year Real Interest Rate 0% Annual Inflation Rate 5% % 8% When the rate of inflation is equal to the interest rate on Damaris's deposit, the purchasing power of her deposit course of the year. over the

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