ZuoTi.Pro
Question

Assuning that the inflation rate frum 2015 through 2017 is 6% per year, what would be the real value or a $50.000 income in each of the three years? (Show all work) What does the real value for 2016 mcan? l.
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Q. Assuming inflation rate is 6% per year, real values will be:

If one have $50,000 in the year 2014

Real value of $50,000 in 2015 = 50000*(1-0.06) = 50000*0.94 = $47,000

Real value of $50,000 in 2016 = 50000*(1-0.06)^2 = 50000*0.94*0.94 = $44,180

Real value of $50,000 in 2017 = 50000*(1-0.06)^3 = 50000*0.94 *0.94*0.94 = $41529

Real value for the year 2016 which is equal to $44,180 means that the value of money has degraded fron $50,000 in year 2014. Due to inflation value of money as well as its purchasing power decreases. Thus real value of money indicate the purchasing power of money considering that inflation has increased the prices of the products.

0 0
Add a comment
Know the answer?
Add Answer to:
Assuning that the inflation rate frum 2015 through 2017 is 6% per year, what would be...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • (a) What is the CPI in 2015, 2016, and 2017 if 2015 is the base year?...

    (a) What is the CPI in 2015, 2016, and 2017 if 2015 is the base year? (b) What is the (CPI) inflation 2015-2016 and 2016-2017? (c) How does CPI differ in 2015 and 2016 if 2016 is the base year? (d) What effect does this have on your calculation of (CPI) inflation between 2015- 3. Suppose you are told that a basket of goods to calculate a consumer price index contains the following items: 4 apples and 2 bottles of...

  • Can you please fill out all of the questions for whoever does it the last person...

    Can you please fill out all of the questions for whoever does it the last person onky dis half of it. Question 1 20 pts The table below shows production and prices for a stylized economy. Assume the base year is 2015. Auction Price of Y($) of Z i Year Production Price of X of X ($) Production n of Y Production Price of Z ($) 2015 275 units 15 180 units 23 135 units 80 2016 330 units 15.75...

  • Reference equation: Real GDP per capita growth rate Nominal GDP per capita growth rate - Inflation...

    Reference equation: Real GDP per capita growth rate Nominal GDP per capita growth rate - Inflation rate - Population growth rate This equation is an approximation of the exact rate of growth of GDP per capita, and so it results in some errors when calculating this rate. However, the simplified equation both is easy to use and results in small error terms when inflation, nominal GDP growth, and population growth are low, and so it is a useful approximation. The...

  • GDP Inflation Deflator Rate YEAR CPI GDP %GDP | Real GDP | %RGDP (%CPI) |(2015-100) 2012...

    GDP Inflation Deflator Rate YEAR CPI GDP %GDP | Real GDP | %RGDP (%CPI) |(2015-100) 2012 231.2 95.43 1619 2013 234.72 97.11 16785 2014 236.27 98.94 17522 2015 237.83 100.00 18219 2016 242.7 01.09 1870 2017 247.91 103.02 19485 1. Calculate the annual inflation rate using the CPI. 2. Calculate the annual GDP growth rate using the GDP. 3. Explain how the inflation rate and the GDP growth have been moved. 4. Calculate the real GDP using GDP deflator by...

  • assume the inflation rate 6% per year and the real interest rate is 5%. A)the number...

    assume the inflation rate 6% per year and the real interest rate is 5%. A)the number of future dollars after 5 years that will be equivalent to 30000 calculating first real dollar equivalence (constant value dollars) B) The number of future dollars after 5 years that will be equivalent 30000 market interest rate ?

  • yhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $173,000 2016 198,000...

    yhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $173,000 2016 198,000 2017 232,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $72,000. The equipment is expected to last three years and have a(n) $6,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $41,000 in 2015, $17,000 in 2016, and $8,000 in 2017. Wyhowski's tax...

  • Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $173,000 2016 198,000...

    Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $173,000 2016 198,000 2017 232,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $72,000. The equipment is expected to last three years and have a(n) $6,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $41,000 in 2015, $17,000 in 2016, and $8,000 in 2017. Wyhowski's tax...

  • The following graph shows the inflation rate in the US between 1965 and 2015. Inflation 16%...

    The following graph shows the inflation rate in the US between 1965 and 2015. Inflation 16% rate 14 (percent) 12 10 8 6 4 rumah un 2 0 1975 1985 1995 2005 -21965 2015 -4 (a) From 1965 to 1995, does CPI in the US always increase over time? Explain. (b) Suppose 2009 is the base year, and the inflation rate between 2009 and 2010 is -2%. (i) What is the CPI in 2009? (ii) Calculate the CPI in 2010....

  • Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $181,000 2016 207,000...

    Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $181,000 2016 207,000 2017 243,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $75,000. The equipment is expected to last three years and have a(n) $6,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $43,000 in 2015, $17,000 in 2016, and $9,000 in 2017. Wyhowski's tax...

  • Critical Thinking Skills Assignment: Quantitative & Empirical Inflation Rate Year 1972 CPI 42.5 46.2 Inflation Rate...

    Critical Thinking Skills Assignment: Quantitative & Empirical Inflation Rate Year 1972 CPI 42.5 46.2 Inflation Rate Blank Blank 1973 1974 51.9 Year | CPI 2011 225.672 2012 229.601 2013 233.049 2014 234.812 2015 | 236.525 2016 241.432 1975 55.5 1976 1977 58.2 62.1 Part 1. 1. Calculate the inflation rate for 1973. That is, how much is the percentage increase in the CPI from 1972-73? Show how you calculated this percentage by giving the formula. Write your answer in the...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT