Time Value of Money and Time Value of Money and InflationInflation

By: meBy: me

DefinitionsDefinitions

The Time Value of Money is: The Time Value of Money is: the idea the idea that money available at the present that money available at the present time is worth more than the same time is worth more than the same amount in the future due to its amount in the future due to its potential earning capacitypotential earning capacity

Inflation is Inflation is a persistent, substantial a persistent, substantial rise in the general level of prices rise in the general level of prices related to an increase in the volume related to an increase in the volume of money and resulting in the loss of of money and resulting in the loss of value of currencyvalue of currency

The 1950s to TodayThe 1950s to TodayITEM: ring carot diamondITEM: ring carot diamond

The item cost The item cost $399.00$399.00 in 1950. in 1950.

The item costs The item costs $899.99 today$899.99 today

It has gone up It has gone up $500.99$500.99

That is a percent That is a percent increase of .79%increase of .79%

So the inflation So the inflation is .007%is .007%

The 1950s to TodayThe 1950s to TodayITEM: ritz craxITEM: ritz crax

The item cost 32ceng The item cost 32ceng in 1950.in 1950.

The item costs $18.99 The item costs $18.99 todaytoday

It has gone up It has gone up $18.67$18.67

That is a percent That is a percent increase of 8.34%increase of 8.34%

So the inflation is So the inflation is 58%58%

The 1950s to TodayThe 1950s to TodayITEM: ITEM: Square dance Cotton Check Square dance Cotton Check

Dress Dress The item cost $3.29 in The item cost $3.29 in

1950.1950.

The item costs $The item costs $34.9934.99 today today

It has gone up It has gone up $31.70$31.70

That is a percent That is a percent increase of 9.63%increase of 9.63%

So the inflation is So the inflation is 963.5%963.5%

The 1990s to TodayThe 1990s to TodayITEM: Super Nintendo :DDITEM: Super Nintendo :DD

The item cost $159.00 The item cost $159.00 in 1990. in 1990.

The item costs $The item costs $$89.99$89.99 today today

It has gone up $-69It has gone up $-69

That is a percent That is a percent increase of -0.4%increase of -0.4%

So the inflation is -So the inflation is -43.4%43.4%

The 1990s to TodayThe 1990s to TodayITEM: ITEM: Frozen PeasFrozen Peas

The item cost 97 centz The item cost 97 centz per lbs in 1990.per lbs in 1990.

The item costs $45.35 The item costs $45.35 todaytoday

It has gone up It has gone up $44.38$44.38

That is a percent That is a percent increase of 1.03%increase of 1.03%

So the inflation is So the inflation is 0.01%0.01%

The 1990s to TodayThe 1990s to TodayITEM: SnowboardITEM: Snowboard

The item cost $199.00 The item cost $199.00 in 1990. in 1990.

The item costs The item costs $349.95 today$349.95 today

It has gone up It has gone up $150.95$150.95

That is a percent That is a percent increase of .75%increase of .75%

So the inflation is So the inflation is 75.85%75.85%

Questions:Questions: Calculating inflation over the past 60 years helps Calculating inflation over the past 60 years helps

us us to show how much the economy changed to show how much the economy changed throughout the yearsthroughout the years

Why is it important that people get raises?Why is it important that people get raises? So So they have enough to raise for themselves they have enough to raise for themselves and/or familyand/or family

If you get a 2% raise every year, will you be able If you get a 2% raise every year, will you be able to keep up with inflation? Why or why not? to keep up with inflation? Why or why not? No No because the salaries change and is the because the salaries change and is the economyeconomy

Conclusion: What I have learnedConclusion: What I have learned((You must use the terms Time Value of Money and You must use the terms Time Value of Money and

Inflation in your paragraph)Inflation in your paragraph)

Over the past 60 years Over the past 60 years the prices the prices have gone up significantlyhave gone up significantly.. the the economy is all over the place. economy is all over the place. Prices are going up too high for Prices are going up too high for the country to handle. the country to handle.