| Question |
On January 1, 2011, Albert invested $1,000 at 6 percent interest per year for three years. The CPI on January 1, 2011, stood at 100. On January 1, 2012, the CPI (times 100) was 105; on January 1, 2013, it was 110; and on January 1, 2014, the day Albert’s investment matured, the CPI was 118. Find the real rate of interest earned by Albert in each of the three years and his total real return over the three-year period. Assume that interest earnings are reinvested each year and themselves earn interest. |
