Question

If you had $1000 dollars in 1925, based on inflation, what would you have in 1950, 1975, 2000? What do you estimate the value would be in 2025

i dont have more information this is the question from asignment 1 and the student are allowed to use the online calculater for canada bank

Answer 1

1) Using online calculator for Canada Bank, we get money amount for 1950, 1975 and 2000 are $1387.10, $3247.31 and $10,397.95 based on initial money value $1000 in 1925.

2) From online calculator we also get money amount in 2017 is $14,064.52 with annual inflation rate is 2.92%.

Taking 2017 as base year,

Future money Amount in 2025 = P(1+r/n)^nt where P= Money value in base year,

r = annual inflation rate, n = number of times inflation is compounded , t = total number of years = 8

Therefore,

            A = 14064.52(1 +2.92/1)^1.8 = $17,706.11