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13 October, 00:19

You're considering an investment that you expect will produce a return of 77 percent next year, and you expect that your real rate of return on this investment will be 33 percent. what do you expect inflation to be next year?

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  1. 13 October, 02:19
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    This problem is simply straight forward. The total rate of return is simply the sum of the real rate of return and the inflation rate, that is:

    77% = 33% + Inflation Rate

    Therefore inflation is:

    Inflation Rate = 77% - 33%

    Inflation Rate = 44%
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