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4 Hadley puts 300 in a savings account earning 1 annual interest and 300 in...

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4 Hadley puts 300 in a savings account earning 1 annual interest and 300 in an investm account that averages 5 annual returns The graph below shows the balance in those accounts I over 20 years The dashed line reflects the change in price of a 300 item due to 2 annual inflation P a a Approximately how much has Hadley s initial investment grown over 20 years Include both the dollar value and percent change return on investment 5 The real rate of return on an investment is the annual rate of return after taking into account the impacts of inflation It more accurately reflects the purchasing power of your money You can calculate it using the formula below where nominal rate is the given rate of return 1 Nominal Rate 1 Inflation Rate What is the real rate of return on Hadley s investments Refer back to question 4 Real Rate of Return b What is the real rate of return on Hadley s savings c How does the graph show the impact of inflation on the value of Hadley s savings over time d Question 4 used the equations y 300 1 05 and y 300 1 01 to represent Hadley s savings and investment balances over time respectively Rewrite these equations to represent their account balances based on their real rate of return

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