Question

Reijo has invested €8,000 in an investment fund with an average return of 6% per year. Reijo sells the fund shares after 6 years, and a 30% tax is normally paid on the capital gain. How many percent is the real return on Reijo's investment when the consumer price index has risen from 104.1 to 116.6 at the same time?

174

likes
868 views

Answer to a math question Reijo has invested €8,000 in an investment fund with an average return of 6% per year. Reijo sells the fund shares after 6 years, and a 30% tax is normally paid on the capital gain. How many percent is the real return on Reijo's investment when the consumer price index has risen from 104.1 to 116.6 at the same time?

Expert avatar
Hester
4.8
117 Answers
To calculate the real return on Reijo's investment, we need to adjust the nominal return with inflation using the Consumer Price Index (CPI).

1. Calculate the nominal return after 6 years:
Future value (FV) of investment = €8,000 * (1 + 0.06)^6
FV = €8,000 * (1.06)^6
FV = €8,000 * 1.418519
FV = €11,348.15

2. Calculate the capital gain:
Capital gain = FV - Initial investment
Capital gain = €11,348.15 - €8,000
Capital gain = €3,348.15

3. Calculate the tax on capital gain:
Tax on capital gain = 30% * Capital gain
Tax = 0.30 * €3,348.15
Tax = €1,004.45

4. Calculate the net capital gain:
Net capital gain = Capital gain - Tax
Net capital gain = €3,348.15 - €1,004.45
Net capital gain = €2,343.70

5. Calculate the real return after adjusting for inflation:
Real return = (Net capital gain / Initial investment) * (CPI at end / CPI at start)
Real return = (€2,343.70 / €8,000) * (116.6 / 104.1)
Real return = 0.2929625 * 1.119663
Real return = 0.3279667

Therefore, the real return on Reijo's investment with inflation adjustment is 32.80%.

\boxed{32.80\%}

Frequently asked questions (FAQs)
What is the standard deviation of the following dataset: 10, 15, 20, 25, 30, 35?
+
What is the value of y when x=2 in the circle function x^2 + y^2 = 9?
+
What is the measure of the angle formed by a tangent and a radius intersecting at a point on a circle?
+
New questions in Mathematics
How much volume of water in MegaLiters (ML) is required to irrigate 30 Hectare crop area with depth of 20mm?
Convert the following function from standard form to vertex form f(x) = x^2 + 7x - 1
Consider the relation R defined on the set of positive integers as (x,y) ∈ R if x divides y. Choose all the true statements. R is reflexive. R is symmetric. R is antisymmetric. R is transitive. R is a partial order. R is a total order. R is an equivalence relation.
Kayla has $8,836.00 in her savings account. The bank gives Kayla 5%of the amount of money in account as a customer bonus. What amount of money does the bank give Kayla? Justify your answer on a 6th grade level.
Given that y = ×(2x + 1)*, show that dy = (2x + 1)" (Ax + B) dx where n, A and B are constants to be found.
What’s 20% of 125?
Suppose 56% of politicians are lawyers if a random sample of size 873 is selected, what is the probability that the proportion of politicians who are lawyers will be less than 55% round your answer to four decimal places
In a normally distributed data set a mean of 31 where 95% of the data fall between 27.4 and 34.6, what would be the standard deviation of that data set?
There were no defectives in a sample of 1 light bulb does this sample provide sufficient evidence that in the warehouse with millions of light bulbs fewer than 10% are defective?
John he’s going to the carnival with his friends. He spends $25 on an admission ticket. He buys 10 games at X dollars each and two boxes of popcorn at Y dollars each. Write an expression to show the total cost of admission game, tickets and popcorn.
Use linear approximation to estimate the value of the sine of 31o.
P(Z<z)=0.1003
During a month's time, an automobile sales person receives a 6% commission on the first $5000 in sales, a 7% commission on the next $5000 sales, 8% commission on anything over $10,000. What is her commission for $36,000 in sales?
The mass of 120 molecules of X2C4 is 9127.2 amu. Identify the unknown atom, X, by finding the atomic mass. The atomic mass of C is 12.01 amu/atom
2X+2=8
solid obtained by rotation around the axis x = -1, the region delimited by x^2 - x + y = 0 and the abscissa axis
Find the set of points formed by the expression 𝜋<|𝑧−4+2𝑖|<3𝜋.
P 13. Let P a point inside of a square ABCD. Show that the perpendicular lines drawn from A, B, C, respectively D, to BP, CP, DP, respectively AP are concurrent. Use geometric rotation.
A candy manufacturer must monitor deviations in the amount of sugar in their products They want their products to meet standards. They selected a random sample of 20 candies and found that the sandard deviation of that sample is 1.7. What is the probabilty of finding a sample variance as high or higher if the population variance is actually 3277 Assume the population distribution is normal.
What is the set-off agreement? Make your own example, describe and put in T accounts how you record transactions.