you now have $100. if the inflation rate is expected to be 5% next year, 6%...

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you now have $100. if the inflation rate is expected to be 5% next year, 6%...

you now have $100. if the inflation rate is expected to be 5% next year, 6% the year after, and 10% the year after that, how much money would you need three years from now to equal the purchasing power you now have?

use MARR = 12% and tax rate = 40% as needed.

business accounting

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Answer 1

Answer #1

MARR = 12% when f = 10%

'Real' MARR

=(1+0.12) / (1+0.10) - 1

= .018 = 18%

Now I have $100

to calculate purchasing power

F = P (1+ inflation rate) n

= $100 (1+ .18)10

=$1,180

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Answer 2

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