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Select one savings option from the Simple Interest column and one from the Compound Interest
column to compare:
Step 3: Calculate the inflation on the interest earned Multiply the total interest earned by a
cumulative inflation rate of 3%.
Step 4: Find the after-tax real rate of return Subtract the taxes and inflation from the interest
earned. Simple Interest: $326.25 Compound Interest: $334.08 Final Amount After Three Years:
Simple Interest: $5,326.25