Five years from now, when you’ve graduated and started your career, your salary is $65,000 per year. During the following year, the inflation rate is 6%. How much would your salary have to rise during that year to keep the purchasing power (or real value) of your salary from falling? Explain, and show your work.
Answer :-
Here it is given that inflation rate is 6%
So the product that is of $100 at the time when the salary is $65000 then in the following the salary needs to increased at the same inflation rate by which we keep the equal purchasing power of the salary
Let us suppose a toy is of $100 when the salary was $65000 means now a person can purchase 650 toys by his salary
Then due to inflation rate the product in the following month is of $106 then to get 650 toys now the salary must be 106*650 = $68900
Means the new salary need to be = 68900/65000*100 = 106% of previous salary
Therefore salary must rise 106% - 100% = 6%
That measn equal to inflation rate
Five years from now, when you’ve graduated and started your career, your salary is $65,000 per...
8. U.S. GDP in 2012 was $16,020 billion, and GDP in 2013 was $16,570 billion. Did the economy grow from 2012 to 2013 in real terms? The CPI in 2012 was 229.5, and the CPI in 2013 was 233.0. a. Use the Babe Ruth formula to convert 2013 GDP into 2012 dollars. Show your work. b. Using your answer from part (a), calculate the real growth rate of the economy from 2012 to 2013. Show your work. c. Did the...
If you have $2079 ten years from now in your bank account, your current purchasing power is $[real] when real rate was 6%, inflation was 1.5%, and market 7.59%. How much do you have in real money?
You just graduated from college and landed your first "real" job, which pays $32,000 a year. In 12 years how much will you need to earn to maintain the same purchasing power if inflation is 2.50% per year?
You just graduated from college and landed your first "real" job, which pays $32,000 a year. In 12 years how much will you need to earn to maintain the same purchasing power if inflation is 2.50% per year?
Javier recently graduated and started his career with DNL Inc. DNL provides a defined benefit plan to all employees. According to the terms of the plan, for each full year of service working for the employer, employees receive a benefit of 1.5 percent of their average salary over their highest three years of compensation from the company. Employees may accrue only 30 years of benefit under the plan (45 percent). Determine Javier’s annual benefit on retirement, before taxes, under each...
Question 3 (0.5 points) You just graduated from college and landed your first "real" job, which pays $25,000 a year. In 12 years how much will you need to earn to maintain the same purchasing power if inflation is 0.75% per year? Your Answer: Answer Question 4 (0.5 points) You save $600 a year into a 401(k) account that you invest in a mutual fund earning 7% per year. You plan to retire in 30 years. How much money will...
1- if you expect to receive 100,000 exactly five years from now, what do you expect its purchasing power to be if you expect the nominal rate to be 6.0% every year and expect inflation to be 2.0% every year?
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $50,000 has today. He wants all of his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes...
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $40,000 has today. He wants all of his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes...
On your 23rd birthday you decide to invest 10% ($4,500) of your salary in 7% per year. You will continue to make annual deposits equal until you retire 40 years from now (at age 62). You expect yo during these 40 years. How much money would you have accumulat you retire? Show your work. nue to make annual deposits equal to this 10% of your annual salary ow (at age 62). You expect your salary to increase by 4% each...