LizbethRC238 LizbethRC238

28-08-2020
Business

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Assume the real rate of interest is 4.00% and the inflation rate is 4.00%. What is the value today of receiving 11,134.00 in 9.00 years

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facundobuzzetti facundobuzzetti

28-08-2020

Answer:

FV= $11,134

Explanation:

Giving the following information:

Future value= $11,134

Interest rate= 4%

Inflation rate= 4%

Number of periods= 9 years

The inflation rate provokes the opposite effect of the interest rate. Therefore, if the interest rate and the inflation rate are equal, the value of money through time remains constant.

FV= PV*(1+i)^n

FV= 11,134* (1+0.04-0.04)^9

FV= $11,134

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