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March 28, 2017

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The Inflation Problem. If a person makes $30,000 in 2004 and the inflation rate is 4% annually, how much is this salary worth in the year 2008 (in terms of 2004 dollars)?

Would I just add by 4% for 4 years?

  • Math - ,

    No, his salary would be worth LESS than $30,000 in the year 2008

    value = 30000(1 - .04)4 = $25,480.40

  • Math - ,

    I would not have figured that out. Thank you

  • Math - ,

    just noticed a typo

    my last line should have been

    value = 30000(1 - .04)^4 = $25,480.40

  • Math - ,

    if a movie ticket cost $8 for admission, what would the cost be in 7 years, assuming an inflation rate of 3%?

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