Jagdeep Is Considering a Project That Requires a Large Immediate

Multiple Choice

Jagdeep is considering a project that requires a large immediate investment and yields a return in five years. If he assumes that there will be be no inflation over the next five years, his calculated rate of return on the project is 25%. If he instead assumes a 10% annual rate of inflation, what will his expected real rate of return be?

A) It will still be 25%.
B) 13.64%
C) 15%
D) 35%
E) 37.5%