Inflation causes things to cost more, and for our money to buy less (hence your grandparents saying "In my day, you could buy a cup of coffee for a nickel"). Suppose inflation decreases the value of money by 2% each year. In other words, if you have $1 this year, next year it will only buy you $0.98 worth of stuff. How much will $100 buy you in 15 years?
Inflation causes things to cost more, and for our money to buy less (hence your grandparents saying "In my day, you could buy a cup of coffee for a nickel"). Suppose inflation decreases the value of money by 2% each year. In other words, if you have $1 this year, next year it will only buy you $0.98 worth of stuff. How much will $100 buy you in 15 years?
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 34P
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Inflation causes things to cost more, and for our money to buy less (hence your grandparents saying "In my day, you could buy a cup of coffee for a nickel"). Suppose inflation decreases the value of money by 2% each year. In other words, if you have $1 this year, next year it will only buy you $0.98 worth of stuff. How much will $100 buy you in 15 years?
$
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