A $35,000 investment grew to a nominal value of $45,000 after 5 years. During this time, the CPI rose from 100 to 140 What happened to the real value of the investment over this period, considering inflation? Use the present value formula: present value is equal to the fraction with numerator future value and denominator future CPI over current CPI
Answer
A
The real value remained the same, keeping up with inflation.
B
The nominal value increased, but the real value declined.
C
The investment lost all real value due to inflation.
D
The real value of the investment grew faster than inflation.