Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI).
Question:
Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). The following are several problems related to price increases.
a. In 1984 the CPI was 100; 30 years later, it was 235. What was the annual rate of inflation?
b. Nancy and Pam both currently earn $100,000. If the annual rate of inflation is 4 percent, how much must each earn after ten years to maintain their purchasing power?
c. Your parents bought a home for $50,000 in 1982 and sold it in 2012 for $250,000. What was the annual rate of price increase over the 30 years?
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This problem combines time value and inflation a 1001 x 30 235 IF 235100 235 Since 235 is slightly ...View the full answer
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Related Book For 
Basic Finance An Introduction to Financial Institutions, Investments and Management
ISBN: 978-1285425795
11th Edition
Authors: Herbert B. Mayo
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