Homework Help: home economics

Posted by ryan on Thursday, February 25, 2010 at 9:20am.

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 - bobpursley, Thursday, February 25, 2010 at 9:54am
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 - ryan, Thursday, February 25, 2010 at 12:16pm
can you explain why you use that formula?

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