It is now 2030 and you have saved $250 000 since you started saving in 2007.During the same period inflation averaged 3 percent.What would your $250000 be worth in 2007 dollars?

Question

Quizplus · Accepted Answer

To find the value of $250,000 in 2007 dollars, considering an average inflation rate of 3% from 2007 to 2030 (a period of 23 years), we use the formula for the present value: Present Value = Future Value / (1 + inflation rate)^number of years. Plugging in the values: $250,000 / (1 + 0.03)^23 ≈ $126,673. This calculation adjusts the future value back to its equivalent in 2007 dollars, accounting for the decrease in purchasing power due to inflation.

It Is Now 2030 and You Have Saved $250 000