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)
Question: Convert 20 centimeters to inches.
+
What is the area of a triangle with base b and height h? (A = 0.5 * b * h)
+
What is the value of the angle in a triangle given the lengths of two sides using the Law of Cosines?
+
New questions in Mathematics
12-6x=4x+2
String x = 5 Int y=2 System.out.println(x+y)
I) Find the directional derivative of 𝑓(π‘₯, 𝑦) = π‘₯ sin 𝑦 at (1,0) in the direction of the unit vector that make an angle of πœ‹/4 with positive π‘₯-axis.
If L = (-2, -5) is reflected across y= -4 , what are the coordinates of L?
3x+5y=11 2x-3y=1
Derivative of x squared
7/6-(-1/9)
Mrs. Emily saved RM10000 in a bank. At the end of the eighth year, the amount of money accumulated amounted to RM19992.71. If the bank pays an annual interest of x% for a year compounded every 6 months. Calculate the value of x.
logy/logx + logz/logy + logt/logz = 8xΒ².t x=?
Determine the reduced equation of the straight line that is perpendicular to the straight line r: y=4x-10 and passes through the origin of the Cartesian plane
7. Find the equation of the line passing through the points (βˆ’4,βˆ’2) π‘Žπ‘›π‘‘ (3,6), give the equation in the form π‘Žπ‘₯+𝑏𝑦+𝑐=0, where π‘Ž,𝑏,𝑐 are whole numbers and π‘Ž>0.
The physician orders 15mg of tramadol(liquid). On hand is 30mg/2mL vials. How many mL will the MA administer?
Is -11/8 greater than or less than -1.37?
Let A, B, C and D be sets such that | A| = |C| and |B| = |D|. Prove that |A Γ— B| = |C Γ— D|
Two minus log 3X equals log (X over 12)
A property sold for $745,000 in a co-brokered transaction. The seller has agreed to pay a 7% commission to the listing firm. The listing firm has agreed to equally split the commission with the selling firm. If the buyer’s broker will receive 8% of the selling firm’s commission, how much commission will the buyer’s broker receive? $14,900 $3725 $$37250 $18625
A factory produces glass for windows. The thickness X of an arbitrarily selected pane of glass is assumed to be Normally distributed with expectation ΞΌ = 4.10 and standard deviation Οƒ = 0.04. Expectation and Standard deviation is measured in millimeters. What is the probability that an arbitrary route has a thickness less than 4.00 mm?
Let G be the center of gravity of triangle ABC. We draw through A a parallel to BC on which we take a point D so that DGβŠ₯BG. If the area of the quadrilateral AGBD is equal to s, show that ACΒ·BDβ‰₯2Β·s.
Write the inequality in the form of a<x<b. |x| < c^2
A group of 17 people spent 9 days on vacation and spent R$776.34 on barbecue meat and the bill needs to be divided as follows: 6 people stayed for 9 days, 7 people stayed for 4 days, and 2 people stayed for 5 days and 2 people stayed 3 days, how much does each group have to pay for the days they stayed?