You Earn a Nominal Return of 6% on Your Savings

question 68

Short Answer

You earn a nominal return of 6% on your savings and the tax rate is 20%. If the rate of inflation is 2%, what are the before-tax real interest rate and your after-tax rate of return?

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Definitions:

Discontinue

The act of ending or stopping something, such as medication or treatment.

NPO

An abbreviation for "nil per os", a medical instruction meaning nothing by mouth, used to ensure a patient's stomach is empty for a procedure or test.

Mcg

Microgram, a unit of mass equal to one millionth of a gram, often used in medicine to specify dosages of drugs and vitamins.

Microgram

A unit of mass equal to one millionth of a gram.