Suppose you'll have an annual nominal income of $40,000 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 $40,000 salary for each of the next three years. Year 1: $ Year 2: $ Year 3: $ b. If you have a COLA in your contract, and the inflation rate is 5 percent, what is the real value of your salary for each year? Year 1: $ Year 2: $ Year 3: $

Suppose you'll have an annual nominal income of $40,000 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 $40,000 salary for each of the next three years. Year 1: $ Year 2: $ Year 3: $ b. If you have a COLA in your contract, and the inflation rate is 5 percent, what is the real value of your salary for each year? Year 1: $ Year 2: $ Year 3: $

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 12SQ

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