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Exercise

Adjusting future values for inflation

You can now put together what you learned in the previous exercises by following a simple methodology:

  • First, forecast the future value of an investment given a rate of return
  • Second, discount the future value of the investment by a projected inflation rate

The methodology above will use both the .fv() and .pv() functions to arrive at the projected value of a given investment in today's dollars, adjusted for inflation.

Instructions

100 XP
  • Calculate the future value of a $10,000 investment returning 8% per year for 10 years using .fv() and assign it to investment_1.
  • Calculate the inflation-adjusted present value of investment_1, using an inflation rate of 3% per year and assign it to investment_1_discounted.