Question

Income Yorktown Earns from Renting the Outdoor Arena at Lakeside Park,

2015 Rental Fee $14,400 CPI180.9

2016 Rental Fee $15,000 CPI 207.6

2017 Rental Fee$15,800 CPI212.9

2018 Rental Fee $16,800 CPI 220.7

2019 Rental Fee $17,020 CPI 232.5

If the rental fee had kept pace with inflation for the period, what would be the fee in 2019? If the rental fee had kept pace with inflation for the period, what would be the fee in 2019?

Answer 1

Rental Fee for 2015 = 14400, CPI for 2019 = 232.5 and CPI for 2015 = 180.9

Total inflation from 2015 to 2019 = (CPI for 2019 / CPI for 2015) - 1 = (232.5/180.9) - 1 = 1.28524046 - 1 = 0.28524046 = 28.524046%

If rental had kept pace with the inflation, then rental would have increased by a total of 28.524046% from 2015 to 2019

Rental Fee in 2019 = Rental Fee in 2015 x ( 1 + Total inflation for 2015 to 2019) = 14400 x (1 + 28.524046%) = 14400 x 1.28524046 = 18507.4626 = $18507.46

Hence Rental Fee in 2019 if it had kept pace with inflation = $18507.46