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# Your bank has stated that it pays 4% interest, annually compounded, for a 7 year certificate of deposit. You have decided to invest $10,000 for a 7...

Your bank has stated that it pays 4% interest, annually compounded, for a 7 year certificate of deposit. You have decided to invest $10,000 for a 7 year period. If the average inflation during the 7 years is 2.5% per year during the 7 years, and you anticipate being in the 20% tax bracket for the first 3 years, and 40% for the next 4 years, what is your real,after tax return for this deposit? Should you make the deposit?