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You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding. What would be the future value of your investment? Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's future value in terms of purchasing power? What would be the investment's future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?

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