Question content area top
Part 1
The U.S. stock market has returned an average of about
99%
per year since 1900. This return works out to a real return (i.e., adjusted for inflation) of approximately
66%
per year.
a. If you invest
$120 comma 000120,000
and you earn
66%
a year on it, how much real purchasing power will you have in
3030
years?
b. If you invest
$6 comma 0006,000
per year for
2020
years, how much real purchasing power will you have at the end of
3030
years? The interest rate is
66%
per year.