Joe wants to make an investment that will have a real growth rate of 7%. If the current inflation rate is 1.4%, what annual interest rate will he need to get on his investment to accomplish his goal?
A) 8.50%
B) 7.63%
C) 11.15%
D) 12.82%

Question

Quizplus · Accepted Answer

The real growth rate is the nominal growth rate minus the inflation rate. So, to get a real growth rate of 7%, Joe needs an annual interest rate of 7% + 1.4% = 8.4%.

Joe Wants to Make an Investment That Will Have a Real