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 necessary and sufficient condition of congruence for two triangles?
+
What is the average number of goals scored per game by a hockey team that scored 5, 7, 3, 6, and 4 goals in their last five games?
+
Which function grows faster as x approaches infinity, f(x) = 10^x or f(x) = e^x?
+
New questions in Mathematics
Calculate to represent the function whose graph is a line that passes through the points (1,2) and (−3,4). What is your slope?
A particular employee arrives at work sometime between 8:00 a.m. and 8:40 a.m. Based on past experience the company has determined that the employee is equally likely to arrive at any time between 8:00 a.m. and 8:40 a.m. Find the probability that the employee will arrive between 8:05 a.m. and 8:30 a.m. Round your answer to four decimal places, if necessary.
find the value of the tangent if it is known that the cos@= 1 2 and the sine is negative. must perform procedures.
The gross domestic product the gdp for the United States in 2017 was approximately $2.05x10^3. If you wrote this number in standard notation , it would be 205 followed by how many zeros
The random variable Y is defined as the sum between two different integers selected at random between -4 and 2 (both included). What are the possible values of the random variable Y? What is the value of P(Y=-3)? And whether it is less than or equal to -5?
What’s 20% of 125?
Solve this mathematical problem if 3/5 of a roll of tape measures 2m. How long is the complete roll? Draw the diagram
There are four times as many roses as tulips in Claire’s garden. Claire picked half of the number of roses and 140 roses were left in the garden. How many roses and tulips were in the Garden the first?
According to a survey in a country 27% of adults do not own a credit card suppose a simple random sample of 800 adults is obtained . Describe the sampling distribution of P hat , the sample proportion of adults who do not own a credit card
You mix a powder drug with a 4.5ml of liquid to get a reconstituted solution with a concentration of 250mg/ml. The prescribers order is for 500 mg . You will give what ml of the reconstituted solution
Find all real numbers x that satisfy the equation \sqrt{x^2-2}=\sqrt{3-x}
. What will be the osmotic pressure of a solution that was prepared at 91°F by dissolving 534 grams of aluminum hydroxide in enough water to generate 2.784 ml of solution.
The volume of a cube decreases at a rate of 10 m3/s. Find the rate at which the side of the cube changes when the side of the cube is 2 m.
Which statement best describes the key changes in perspectives on inclusion? An inclusive program must consider the unique experiences of every child and family as well as the child's strengths and needs. There is a shift in thinking about individual programs as "inclusive programs" to thinking about inclusion as something that reflects the cultural influence of the family. There is a greater emphasis on barriers to full participation and the acknowledgement that all children are unique and must be fully and meaningfully engaged in a program. In an inclusive program all participants are accepted by their peers and other members of the community.
A natural gas company has a fixed rate of 1,320 pesos plus 1,590 pesos per cubic meter of gas consumed monthly per customer. Indicate the cost function to determine the value in pesos of the cubic meters of gas consumed in a month per customer. How much did a customer who consumed 18 cubic meters of gas pay? If a customer paid 34,710 pesos, how many cubic meters of gas did he consume?
Write an expression using compatible numbers that can be used to estimate the quotient 629\86
How many cards do you expect to pull from a poker deck until you get an ACE?
What is the percentage of nitrogen abundance in copper dinatrate Cu(NO3)2
calculate the product of 4 and 1/8
A small box measures 10 in. by 4 in. by 6 in. high. Find the volume of the box.