Problem 388
The Inflation Problem. If a person makes $30,000 in 2004 and the inflation rate is4% annually, how much is this salary worth in the year 2008 (in terms of 2004 dollars)?
Solution
Salary = 30000 (1 + 
)4
= 30000 (1.04)4
= 30000 * 1.1698585
= $35095.75