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You have $44,000 in a savings account that pays 2% annual interest and the inflation rate is 3.24%. how much buying power in dollars will you lose in one year because of inflation?

Respuesta :

barnuts

The effective annual interest rate would be the difference of nominal interest and inflation rate.

ieff = 2% - 3.24%

ieff = - 1.24% = -0.0124

 

Therefore the money left after 1 year would be:

F = 44,000 * (1 – 0.0124)

F = 43,454.4

 

So the amount of money lost is:

lost = 44,000 - 43,454.4

lost = $545.6

abiolataiwo2015

The amount of buying power in dollars you will lose in one year because of inflation is: $545.6.

Buying power

First step

Money left = 44,000×[1-(0.0324-0.02)]

Money left = 44,000× (1 – 0.0124)

Money left = 44,000× 0.9876

Money left=$43,454.4

Second step

Amount of money=$44,000 - $43,454.4

Amount of money =$545.6

Therefore the amount of buying power in dollars you will lose in one year because of inflation is: $545.6.

Learn more about buying power here: https://brainly.com/question/9050347

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