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home economics

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Suppose you’ll have an annual nominal income of $40,000 for each of the next 3 years, and the inflation rate is 4 percent per year. Find the real value of your $40,000 salary for each of the next 3 years.

  • home economics -

    future value: 40,000 (1/(1.04)^n

    You can use google calculator for this.

    put this in the google search window, for year 3
    40000/(1.04)^3

  • home economics -

    can you explain why you use that formula?

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