help please! A couple is earning $40000 per month and would like to know what monthly salary they would expect in 20 years if inflation continues at 4.9%

my book says "the same procedure used to calculate compound interest can also be used to calculate the effects of inflation."

it then uses the solution:

amount=480000(1+0.049)^20
=1249542

if the formula for compound interest is A=P(1+r/m)^mt... where did the "m" go??? can someone explain how to solve inflation problems?

Question

help please! A couple is earning $40000 per month and would like to know what monthly salary they would expect in 20 years if inflation continues at 4.9%

my book says "the same procedure used to calculate compound interest can also be used to calculate the effects of inflation."

it then uses the solution:

amount=480000(1+0.049)^20
=1249542

if the formula for compound interest is A=P(1+r/m)^mt... where did the "m" go??? can someone explain how to solve inflation problems?

anonymous · Answer

@.Sam.  ? :D

anonymous · Answer

@jim_thompson5910 @campbell_st ? :D

anonymous · Answer

When they suddenly lose the "m" it usually means that the compounding is done yearly and so m=1 and forgotten... or they botched the problem. I would go with the idea that they are talking about interest done yearly instead of compounded or something.

anonymous · Answer

It has more to do with the fact that inflation generally isn't compounded, but either done per year or instantaneously (requiring the exponential version)