If the current amount is $100,000,the inflation rate is 4% and the number of periods is 2,what is the real amount?
A)$74,545.34
B)$92,455.62
C)$104,567.32
D)$88,455.32
E)None of the above

Question

Quizplus · Accepted Answer

The formula to calculate the real amount is: Real amount = (Current amount) / (1 + inflation rate)^number of periods
Substituting the values, we get:
Real amount = 100000 / (1 + 0.04)^2
Real amount = 100000 / (1.0816)
Real amount = $92,455.62 (rounded to nearest cent)
Therefore, the correct answer is B.

If the Current Amount Is $100,000,the Inflation Rate Is 4