Suppose you'll have an annual nominal income of $20,000 for each of the next three years, and the Hint: Present value = Future value ÷ (1 + Growth in prices) Real value of next year's income = Next year's income ÷ (1+ Growth in prices) Instructions: Round your responses to the nearest whole dollar. a. Find the real value of your $20,000 salary for each of the next three years. Year 1: $ Year 2: $ Year 3: $ b. If you have a COLA in your contract, what is the real value of your salary for each year? Year 1: $ 19047 Year 2: $ 18144 Year 3: $ 17276
Suppose you'll have an annual nominal income of $20,000 for each of the next three years, and the Hint: Present value = Future value ÷ (1 + Growth in prices) Real value of next year's income = Next year's income ÷ (1+ Growth in prices) Instructions: Round your responses to the nearest whole dollar. a. Find the real value of your $20,000 salary for each of the next three years. Year 1: $ Year 2: $ Year 3: $ b. If you have a COLA in your contract, what is the real value of your salary for each year? Year 1: $ 19047 Year 2: $ 18144 Year 3: $ 17276
Chapter13: Inflation
Section: Chapter Questions
Problem 2SQP
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Question
![Suppose you'll have an annual nominal income of $20,000 for each of the next three years, and the inflation rate is 5 percent per year.
Hint: Present value = Future value = (1 + Growth in prices)*
=
Real value of next year's income = Next year's income ÷ (1+ Growth in prices)
Instructions: Round your responses to the nearest whole dollar.
a. Find the real value of your $20,000 salary for each of the next three years.
Year 1: $
Year 2: $
Year 3: $
b. If you have a COLA in your contract, what is the real value of your salary for each year?
Year 1: $
19047
Year 2: $
18144
Year 3: $
17276](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F36948add-5157-4e0d-93e9-e3b9b7df2f2e%2Fcc3afdce-04b3-407f-84df-e42626965da5%2Fheic4sc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose you'll have an annual nominal income of $20,000 for each of the next three years, and the inflation rate is 5 percent per year.
Hint: Present value = Future value = (1 + Growth in prices)*
=
Real value of next year's income = Next year's income ÷ (1+ Growth in prices)
Instructions: Round your responses to the nearest whole dollar.
a. Find the real value of your $20,000 salary for each of the next three years.
Year 1: $
Year 2: $
Year 3: $
b. If you have a COLA in your contract, what is the real value of your salary for each year?
Year 1: $
19047
Year 2: $
18144
Year 3: $
17276
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