Suppose you’ll have an annual nominal income of $40,000 for each of the next 3 years, and the inflation rate is 4 percent per year. Find the real value of your $40,000 salary for each of the next 3 years.

2 answers

future value: 40,000 (1/(1.04)^n

You can use google calculator for this.

put this in the google search window, for year 3
40000/(1.04)^3
can you explain why you use that formula?