Answer :
= 41,000 USD * 1+(2.5%-1.9%)
= 41,000 USD * 1.60
= 65,600
Net change 65,600 - 41,000 = $24,600
INCREASE IN HIS PURCHASING POWER!!!
OR 60% MORE IN HIS POCKET CHA-CHING!!
Good luck!
#JmackTheInstructor
Net change in purchasing power next year is $24,600
Given:
Increase pay per year = 2.5% per year
Current salary = $41,000
Predicted inflation = 1.9%
Find:
Net change in purchasing power next year
Computation:
Value of money next year = 41,000[1+(2.5%-1.9%)]
Value of money next year = 41,000[1.60%]
Value of money next year = 65,600
Net change in purchasing power next year = 65,600 - 41,000
Net change in purchasing power next year = $24,600
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