Problem 7-09 Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions. a. In Year 1 the CPI was 100; 30 years later, it was 235. What was the annual rate of inflation? Round your answer to the nearest whole number. b. Nancy and Pam both currently earn $100,000. If the annual rate of inflation is 5 percent, how much must each earn after ten years to maintain their purchasing power? Round your answer to the nearest dollar. $ c. Your parents bought a home for $50,000 in Year 1 and sold it in Year 31 for $270,000. What was the annual rate of price increase over the 30 years? Round your answer to the nearest whole number. %
Problem 7-09 Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions. a. In Year 1 the CPI was 100; 30 years later, it was 235. What was the annual rate of inflation? Round your answer to the nearest whole number. b. Nancy and Pam both currently earn $100,000. If the annual rate of inflation is 5 percent, how much must each earn after ten years to maintain their purchasing power? Round your answer to the nearest dollar. $ c. Your parents bought a home for $50,000 in Year 1 and sold it in Year 31 for $270,000. What was the annual rate of price increase over the 30 years? Round your answer to the nearest whole number. %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Problem 7-09
Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions.
a. In Year 1 the CPI was 100; 30 years later, it was 235. What was the annual rate of inflation? Round your answer to the nearest whole number.
b. Nancy and Pam both currently earn $100,000. If the annual rate of inflation is 5 percent, how much must each earn after ten years to maintain their
purchasing power? Round your answer to the nearest dollar.
c. Your parents bought a home for $50,000 in Year 1 and sold it in Year 31 for $270,000. What was the annual rate of price increase over the 30 years?
Round your answer to the nearest whole number.
%
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