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04-02-2024
Mathematics

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A retired couple has a fixed income of $3,400 per month. While this number will not change over 5 years, its purchasing power will decrease.
What is the couple's income per month (in dollars), today?
$
3,400

What will be the couple's income per month (in dollars), 5 years into the future?
$

We consider the income 5 years into the future to be the future value of the income today. To calculate the purchasing power in the future, we need to calculate the present value of the income as if the inflation were an increase.

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