Description
The purchasing power P (in dollars) of an annual amount of A dollars after t years of 6% inflation decays according to P=Ae^-.06t. Determine how large a pension A needs to be so that purchasing power P is $40,000 after 10 years? (answer 2 decimal places)
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Explanation & Answer
40,000 = Ae^-.06(10) = Ae^.6
40,000 = 0.5488A
A = 40,000/0.5488 = $72,884.75
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