If 2400 is invested today at a real interest rate of 17 per...

If $2,400 is invested today at a real interest rate of 17% per year when the inflation rate is 7% per year, what is the equivalent amount that must be recovered each year for 15 years? Use the closest interest rate after rounding to compute the annual.

Transcript

00:01 Hello students we are going to write here if $2 ,400 is invested today at a real interest rate of 17 % per year when the inflation rate is given as 7 % per year what is the equivalent amount that must be recovered each year for 15 years so we are going to write here this is nominal nominal interest rate this value must be 1 plus 17 % that must be divided by 1 plus 7 % and this is minus 1 so this value must be if i write here 1 plus 1 7 and this is 1 plus 0 .07 minus 1 so this value would be 1 .17 this is 1 .07 minus 1 so we are going to calculate this value will come out as so this must be calculated as if i write here for this this is 1 .17 1 .17 multiplied by 1 .07 which is 1 .25 this must be 1 .2 5 this must be 1 .2 so let's erase this to make it more clear.

01:31 19 minus 1 which is 0 .2519.

01:35 So finally we are going to write here this must be interest rate interest rate must be 25 .19 as percentage so if i write here for this so this must be we need to write here this is pv is equivalent to p mt multiplied by 1 minus so this is referred as if i write here this is referred as r 1 minus 1 plus r raise to power minus n to power minus n divided by r so this value must be pv is equal to 2400 this is p mt this must be calculated as 1 minus 1 plus r so this is 25 .19 which is 0 .2519 raised to power minus n so this must be calculated as 0 .2519 so let's raise this to make it more clear so if i write here for this this is 2400 that is equivalent to pmt multiplied by so if i write here this is calculated as 1 minus 0.

03:19 034 and this must be divided by 0 .2519 so now further this is calculated as 2400 this is pmt multiplied by 0 .9656 divided by 0 .2519 which is further calculated as 2400 which is pmt multiplied by 3 .8 so if i write here for this, this is pmt is equivalent to.

03:56 So let's erase this to make it more clear.

04:01 This is 2400 divided by 3 .83...

Question

If $2,400 is invested today at a real interest rate of 17% per year when the inflation rate is 7% per year, what is the equivalent amount that must be recovered each year for 15 years? Use the closest interest rate after rounding to compute the annual.

Please give Ace some feedback