Personal Finance 1st Edition by Jack R. Kapoor

Exercise 25

Calculating the Effect of Inflation. Bill and Sally Kaplan have an annual spending plan that amounts to $36,000. If inflation is 3 percent a year for the next three years, what amount will the Kaplans need for their living expenses three years from now? (Obj. 4)

Step 1 of 2

We will use compound interest formula to calculate the effect of inflation after 3 years.

Given: