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A Bank Offers Me 10% Annual Interest on an Investment

Question 8

Multiple Choice

A bank offers me 10% annual interest on an investment, but the inflation rate is 5%. If I invest $500 in the bank, what will the value of my investment be, in real dollars, in five years time?


A) $396
B) $631
C) $638
D) $805
E) $1 028

Correct Answer:

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