Present Value
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You plan on depositing $10,000 a year in real terms into your investment account for the next 4 years. The relevant nominal discount rate is 7.5 percent and the inflation rate is 4.2 percent. What are these deposits worth in today's dollars?
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Solution Summary
The solution explains how to calculate the present value of deposits.
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Since we are depositing in real terms, we need to use the real rate for discounting. The real ...
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