Bank inflation saving

Let's assume that the interest in the bank is 10% and that we have saved €1000. 10% may seem like a good investment. However, if inflation is 6%, how much can we save in the bank in real terms? For the simplicity of the calculation, the income is not taxed.

Final Answer:

r =  3.4 %

Step-by-step explanation:

$$\begin{gathered} p_1=100\%+10\%=1+\frac{10}{100}=1.1 \\ {p}_2=100\%-6\%=1-\frac{6}{100}=0.94 \\ a=1000\text{eur} \\ b=p_1\cdot a=1.1\cdot 1000=1100\text{eur} \\ c=b\cdot p_2=1100\cdot 0.94=1034\text{eur} \\ r=100\cdot \frac{c-a}{a}=100\cdot \frac{1034-1000}{1000}=3.4\% \end{gathered}$$

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