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:

Brain Development

The process involving growth and change in the brain's structure, function, and cognitive abilities, occurring throughout life but most rapidly in early childhood.

Adulthood

The period in human life after adolescence, characterized by physical, psychological, and social maturity.

Impair Circulation

The reduction or obstruction of blood flow within the body, which may adversely affect health by limiting the delivery of oxygen and nutrients to tissues.

Cigarette Smoking

The inhalation of smoke from burned tobacco that has been rolled into cigarettes.