How Much Money Has to Be Invested Now at 8

question 38

Multiple Choice

How much money has to be invested now at 8% continuous interest in order to have $1000 after 5 years?

• A) $461.56
• B) $18.32
• C) $183.20
• D) $670.32
• E) none of these

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Definitions:

Expected Inflation

The rate at which the general level of prices for goods and services is projected to rise over a specific period, influencing economic decisions.

Real Interest Rate

The rate of interest an investor, saver, or lender receives (or expects to receive) after allowing for inflation.

Capital Investment

The spending of money on resources intended to benefit a business in the long term, such as by acquiring assets or improving infrastructure.

Inflationary Premium

The portion of interest rates or returns that compensates investors for the anticipated erosion of purchasing power due to inflation.