RatedrillFuture value in today's dollars
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
You invest $6,000 at 4.5% a year, compounded annually, for 23 years, while inflation averages 4% a year. What will the investment be worth in today's purchasing power, that is, in today's dollars?
What this problem teaches
The formula: Real FV = PV × (1 + nominal)^n / (1 + inflation)^n. The account will show $16,513.00, but that buys only what $6,699.76 buys today.
A hint if you get stuck
Grow the money at the nominal rate, then deflate by (1 + inflation)^n. Or grow it at the exact real rate (1 + nominal) / (1 + inflation) - 1.
Try it now, free, no account needed
The first 15 tasks on Ratedrill are free. Open it on the practice page, solve it, and get instant feedback with a hint. A free account adds the worked solution; Pro adds timed mode and the certificate.
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