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View Full Version : Some Simple(ish) Annuities/Interest/Inflation etc



YoHoJo
01-15-2013, 10:00 AM
http://puu.sh/1O0qr
http://puu.sh/1O0qr

Mostly need help how to do/set up part C.
Feel free to do part B.

Just to save you time, don't worry about posting if it's after 12:10PM PST

Turpinator
01-16-2013, 04:19 AM
Uhh its been so long since ive done this. Anyway, im going to assume you can do A and B on your own because i seem to be lacking my book with all the tabulated values and the actual formulas.

So. C.
since in this case we care about inflation... the RROR or Real Rate of Return. Heres (http://personalfinance.byu.edu/?q=node/457) some stuff on that. so to calculate the RRoR, that will be applied over each period (25-65, 66-95) you would need to use the 'Fisher Equation' or something. That states that RRoR = (1-interest rate)/(1-inflation rate) - 1. so you RRoR for each period would change from 7.843% from eoy 25-65 and then 3.922% from eoy 66-95.

I apologize for being less helpful than i could be, but without my book, i cant remember what all the F|A or whatever formulas i would have used. But hopefully the RRoR is what youre stumped on.

edit. Oh. 12pm pst. and you had posted it at 2am pst. Well thats my bad. I never read the post time. Whoops.