Review problem on the inflation

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Reference no: EM131781564

Question: Inflation. The purchasing power P (in dollars) of an annual amount of A dollars after t years of 5% inflation decays according to P = Ae^-0.05t (Source: Viewpoints, VALIC)

(a) How long will it be before a pension of $60,000 per year has a purchasing power of $30,000?

(b) How much pension A would be needed so that the purchasing power P is $50,000 after 15 years?

Reference no: EM131781564

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