Personal Finance

Question

Paul Ramos just graduated from college and landed his first "real" job, which pays $23,000 a year. In 10 years, what will he need to earn to maintain the same purchasing power if inflation averages 3 percent

Answer 1

Solve for the Future Value.

Present Value = 23,000

N = 10

i = .03

Use the single sum formula:

FV = PV (1+i) ^ N

FV = 23,000 * (1.03) ^ 10

FV = $33,910.08