# You have been offered an opportunity to invest $5,000 at a rate of 10% for the next

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## Question:

You have been offered an opportunity to invest $5,000 at a rate of 10% for the next 4 years. You expect inflation to continue at 4% per year over this investment period

Required:

(a) Compute the real interest rate.

(b) Compute the nominal value of the investment at the end of 4 years.

(c) Compute the present value of this investment in real terms

**Related Book For**

## Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus