?-?, Inc., a high-tech company in San Diego, whose stock trades on the NYSE exchange, uses a MARR of 25% per year. If the chief financial officer (CFO) said the company expects to make a real rate of return of 20% per year on its investments over the next 3-year period, what is the company expecting the annual inflation rate to be over that time period?
What will be an ideal response?
0.25 = 0.20 + f + 0.20f
1.20f = 0.05
f = 0.0417 (4.2% per year)
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What will be an ideal response?
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