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Inflation

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hifer:
hey guys, i've read both of ur methods, and i saw the example odette's given on A+ bk, I've gone through a similar problem in TSFX further lectures, the way the guy did was to solve for P substituting the current value into A.

After some research, according to the inflation calculator on Forbes.com
http://www.forbes.com/cms/template/tools/calculator/investment_power.jhtml?_DARGS=%2Ffinance%2Fcalc%2Fgaininflation%2Fdroplet_form.jhtml

If u sub Odette's example into it, Initial Investment = $1000000, Assumed average annual return:0% (since u still have the same amt after 20 years), Assumed Inflation Rate: 3%, Number of years: 20

U'll get the ans:
Nominal value of investment at end of period: $1,000,000.00

Inflation adjusted value of investment at end of period: $543,794.69

Which is the answer obtained by using Odette's way. I think that should be the right answer...

*Note the example specified in the A+ bk is another way of calculating depreciation using 0.97 as the depreciation factor... which means as money inflats, its purchasing or buying power effectively deflats/depreciates

maxleng:
righttttttt now im massivly confused... if you find a VCAA question can you please post, i will look for one now and see what method they use

hifer:
I've done all the VCAA papers since 2002, haven't seen these sort of problems so far.. if someone finds it in other papers, i'd love to know as well :D

Odette:
So I was right?
Hmm

maxleng:

--- Quote from: "Odette" ---So I was right?
Hmm
--- End quote ---


your way works for your example according to that site, but doesnt for any of the qs in my text book..

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