If inflation averages 6 percent per year, what is the value of a dollar ten years from now?
A) 53 cents
B) 56 cents
C) 79 cents
D) $1.79

Question

Quizplus · Accepted Answer

To find the future value of a dollar given a 6 percent annual inflation rate over ten years, we use the formula for the future value of money considering inflation: $FV = PV \times (1 - r)^n$, where $PV$ is the present value (1 dollar), $r$ is the annual inflation rate (0.06), and $n$ is the number of years (10). Plugging in the values, we get $FV = 1 \times (1 - 0.06)^{10} = 0.558$, which rounds to approximately 56 cents.

If Inflation Averages 6 Percent Per Year, What Is the Value