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
116 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)
Question: What is the sum of the first 10 terms of an arithmetic sequence with a common difference of 3, starting at 5?
+
What is the value of x in log2(x) + log2(16) = log2(64)?
+
Question: What is the integral of f(x) = 3x^2 + 2x - 4, from x = 1 to x = 5, using the Fundamental Theorem of Calculus?
+
New questions in Mathematics
A circle with a 12-inch diameter is folded in half and then folded in half again. What is the area of the resulting shape?
The sum of an infinite geometric series is 13,5 The sum of the same series, calculated from the third term is 1,5. Q. Calculate r if r>0.
3x+5y=11 2x-3y=1
*Question!!* *Victory saved 3,000 in first bank and 2,000 Naira in union bank PSC with interest rate of X% and Y% per annual respectively his total interest in one year is #640. If she has saved 2,000 naira with first bank and 3,000 naira in union bank for same period she would have made extra 20# as additional interest, then find the value of X and Y
132133333-33
Suppose SAT reading scores are normally distributed with a mean of 496 and a standard deviation of 109. The University plans towards scholarships for students who scores are in the top 7%. What is the minimum score required for the scholarship round your answer to the nearest whole number.
The thermal representation f(x) = 20 times 0.8 to the power of x is known from an exponential function f. Specify the intersection point with the y-axis
During a fishing trip Alex notices that the height h of the tide (in metres) is given by h=1−(1/2)*cos(πt/6) where t is measued in hours from the start of the trip. (a) Enter the exact value of h at the start of the trip in the box below.
A stunt man jumps horizontally from a building to the roof of a garage that is 2 meters lower. How fast does he need to be to land on the roof of the said garage that is 3 meters away from the building?
A company receives sales in $20 per book and $18 per calculator. The per unit cost to manufacture each book and calculator are $5 and 4$ respectively. The monthly (30 day) cost must not exceed $27000 per month. If the manufacturing equipment used by the company takes five minutes to produce a book and 15 minutes to produce a calculator, how many books and calculators should the company produce to maximise profit? Please solve graphically and
The points (-5,-4) and (3,6) are the ends of the diameter of the circle calculate subequation
TEST 123123+123123
The two sides of the triangle are 12 cm and 5 cm, and the angle between the sides is 60°. Cover the area of ​​the triangle!
The grading on a $159,775 house comes to $3974.75. What percent of the total cost is this? (Express your answer to the nearest hundredth percent.)
A contractor gives a bank note for $10250 at a rate of 1% for one month. How much interest is charged for 4 months?
a) Statistics scores are normally distributed with the mean of 75 and standard deviation of 7. What is the probability that a student scores between 80 and 88
Find the equation of a straight line that has slope 3 and passes through the point of (1, 7) . Write the equation of the line in general forms
-6 - t / 4 = -1
16-(x²+x+2)²
Sin(5pi/3)