The impact of inflation

  • Thread starter Thread starter Durhamr
  • Start date Start date
D

Durhamr

Hi

If in 5 years time I accumulate a capital sum of say £100,000 and
inflation was 2.5% over this period, is there a function I can use to
work out my buying power in today’s terms.


Regards
Dusty

Please forgive still very new to excel.
 
Hi Dusty!

Try the PV function:

=PV(2.5%,5,0,100000,0)
Returns: -88385.4287609517

The negative indicates that you need to deposit 88,385.43 to
accumulate the right to receive 100000 in 5 years at 2.5% per year.

--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)
Excel and Word Function Lists (Classifications, Syntax and Arguments)
available free to good homes.
 
Hi Dusty!

Thanks for thanks is always appreciated and shows that a solution is
OK.

The alternative formula approach is:

PV=FV*(1+Inflation)^-NPer
=100000*(1+0.025)^-5
Returns: 88385.4287609517

In this case we are not using the convention of signing cash flows and
the result is positive.

--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)
Excel and Word Function Lists (Classifications, Syntax and Arguments)
available free to good homes.
 
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