If you were promised an annual 3% return on your $10,000 investment and the expected annual inflation was 5%, then which of the following statements about the purchasing power of your original investment and earned return would most likely be correct?1. Your $10,000 original investment and annual 3% return would collectively be worth $10,300 in real goods after one year, implying you have gained 3% of the purchasing power of your money. 2. Your $10,000 original investment and annual 3% return would collectively be worth $9,607.60 in real goods after one year, implying you have lost 2.9% of the purchasing power of your money. 3. Your $10,000 original investment and annual return of 3% would collectively be worth $9809.52 in real goods after one year, implying you have lost about 2% (or 1.904% exact) of the purchasing power of your money. 4. None of the answers given here are correct. 5. Your $10,000 original investment and annual 3% return would collectively be worth $10,800.00 in real goods after one year, implying you have gained 8% of the purchasing power of your money.
This question was answered on: May 23, 2022
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