Therefore, to evaluate the real value of an amount of money today after a given period of time, economic agents compound the amount of money at a given (interest) rate. Most actuarial calculations use the risk-free interest rate which corresponds to the minimum guaranteed rate provided by a bank's saving account for example, assuming no risk of default by the bank to return the money to the account holder on time. To compare the change in purchasing power, the real interest rate (nominal interest rate minus inflation rate) should be used.
Therefore, to evaluate the real value of an amount of money today after a given period of time economic agents compo.und the amount of money at a given (interest) rate Most actuarial calculations use the risk-free interest rate which corresponds to the minimum guaranteed rate provided by a bank's sa.ving account for example, assu,ming no risk of default by the bank to return the money to the account holder on time. To compare the change in purchasing power, the real interest rate (nominal interest rate minus inflation rate) should be used