SOLUTION: Compound interest 8. Between 2000 and 2011 the average annual inflation rate was 3%. Find the salary in 2000 dollars that would be equivalent to a $50,000 salary in 2011.

Algebra ->  Finance -> SOLUTION: Compound interest 8. Between 2000 and 2011 the average annual inflation rate was 3%. Find the salary in 2000 dollars that would be equivalent to a $50,000 salary in 2011.       Log On


   

Question 1041190: Compound interest
8. Between 2000 and 2011 the average annual inflation rate was 3%. Find the salary in 2000 dollars that would be equivalent to a $50,000 salary in 2011.
Answer by jorel555(1290) About Me  (Show Source):
You can put this solution on YOUR website!
If the average inflation rate was 3%, then year 2000 dollars are (1+.03)^11 times that much in the year 2011. So:
50000/(1.03)^11=$36121.07 in 2000 is equivalent to $50000 in 2011, at an average annual inflation rate of 3%. ☺☺☺☺