Question
the purchasing power (in dollars) of an annual amount of A dollars after t years of 5% inflation decays according to
P= Ae^-0.05t
a) how long will it be before a pension of $60,000 per year has a purchasing power of $30,000
b) how much pension A would be needed so that the purchasing power P is $50,000 aftter 15 years?
P= Ae^-0.05t
a) how long will it be before a pension of $60,000 per year has a purchasing power of $30,000
b) how much pension A would be needed so that the purchasing power P is $50,000 aftter 15 years?
Answers
Reiny
a) solve for t
30 = 60e^(-.05t)
b) solve for a
50000 = a e^(-.05(15))
30 = 60e^(-.05t)
b) solve for a
50000 = a e^(-.05(15))