Financial maths question?
The rate of inflation from the beginning of 1995 has been 4.5% per year. A car cost 40000 on Jan 1, 1999. What did it cost on Jan 1, 1997?
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The rate of inflation from the beginning of 1995 has been 4.5% per year. A car cost 40000 on Jan 1, 1999. What did it cost on Jan 1, 1997?
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... An = Ao (1.045)^n
or 40000 = Ao (1.045)^2
or Ao = 40000/(1.045)^2
or Ao = 36629.20
X* 1.045^2 = 40,000
X = 40,000/(1.045^2)