posted by Anonymous .
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?
No, his salary would be worth LESS than $30,000 in the year 2008
value = 30000(1 - .04)4 = $25,480.40
I would not have figured that out. Thank you
just noticed a typo
my last line should have been
value = 30000(1 - .04)^4 = $25,480.40
if a movie ticket cost $8 for admission, what would the cost be in 7 years, assuming an inflation rate of 3%?