Answer:
To maintain the purchasing power, now we will need $279,246.34.
Explanation:
Giving the following information:
Inflation averages 3.5% each year from 2005 to 2020
Nominal value= $50,000
We need to determine the nominal amount of money required to maintain the purchasing power.
We will use the following formula:
Nominal value= current value*(1+r)^n
r= inflation rate
Nominal value= 50,000*(1.035^50)
Nominal value= $279,246.34
