Question

What is the current real value of $1000 after 7 years if the annual rate of inflation is 6%? Round to nearest dollar.

Answer 1

(I'm not sure about this one, but I'll give it a shot!)
If each year, the value of goods is increasing by 6%, then each year, the dollar is 0.94 times what it was last year.

New value of dollar = previous value of dollar * (0.94)^(number of years)
V = v*(0.94)^t
V = 1000*(0.94)^7
V = 648.48

So the current real value is $648.

Answer 2

my answer choices are 665 764 742 150 67

Answer 3

i would said 665 cause it was close :D

Answer 4

Me too. (: