Final answer:
Given a 10% expected rate of return on investment, a 5% inflation rate, and a 17% nominal interest rate, the investment in the new robot is financially advisable as the rate of return exceeds the real interest rate, which is 12% after adjusting for inflation.
Step-by-step explanation:
When considering whether to invest in the new robot with an expected rate of return of 10%, it is important to compare it with the corresponding nominal interest rate and inflation rate. In this case, with inflation at 5% and a nominal interest rate of 17%, we need to determine the real interest rate. The real interest rate is calculated by subtracting the rate of inflation from the nominal interest rate (17% - 5% = 12%). The investment's rate of return exceeds the real interest rate (10% > 7%), thus, from a financial perspective, the investment in the new robot is advisable as the return compensates for both the cost of borrowing and inflation.
Furthermore, starting to save money early in life and leveraging the power of compound interest can significantly increase the value of initial investments over time, far surpassing the initial input amounts, as evident from the given formula example.