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QUESTION
On January 1, 2009, Albert invested $1000 at 6 percent interest per year for three years. The CPI on Jan 1, 2009 stood at 100.
On January 1, 2009, Albert invested $1000 at 6 percent interest per year for three years. The CPI on Jan 1, 2009 stood at 100. On Jan 1 2010, the CPI was 105, Jan 1, 2011 it was 110, On Jan 1 2012, the day Albert's investment matured, the CPI was 118. Find the real interest rate of interest earned by Albert in each of the three years and his total real return over the three year period. Assume the interest earnings are reinvested each year and themselves earn interest.
