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An elderly couple has a fixed income of $3,700 per month.Assuming an inflation rate of 8% compounded annually what is the purchase power in dollars of their monthly income in five years round your answer to the nearest cent

User Emil Lerch
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1 Answer

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Present value formula is given by:


P=(A)/((1+(r)/(n))^(nt))

Putting given values in equation:


P\text{ = }\frac{3700}{(1\text{ + }(0.08)/(1))^(5*1)}

So:

P = $2518.16

User Dominik
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