Answer:
he will be valid
cuz every company has something known as sick leave
Based on the nominal interest rate and the real interest rate, the inflation rate must be 10%.
<h3>What is the inflation rate?</h3>
The inflation rate is the difference between the nominal rate and the real interest rate.
It can be found as:
= Nominal rate - Real interest rate
Solving gives:
= 18% - 8%
= 10%
In conclusion, the inflation rate is 10%.
Find out more on inflation rates at brainly.com/question/25877453.
<u>Calculation of amount of annuity:</u>
It is given that Steve Madison needs $250,000 in 10 years. And we are asked to find how much must he invest at the end of each year, at 5% interest. That means we are asked to find the annuity amount, which can be calculated as follows:
Annuity = Future value / Future value of $1 Annuity
Future value is $250,000
And Future value of $1 Annuity (5%, 10 years using the Present value table) is 12.57789
Hence, the Annuity = 250,000 / 12.57789 = 19,876.15
Hence Steve Madison should invest <u>$19,876.15</u> each year.
