If inflation averages 25 each year from 2015 to 2025 what is

If inflation averages 2.5% each year from 2015 to 2025, what is the purchasing power in 2015 dollars of $75,000 in 2025?

Need clear formulations and steps. Excel answeres are welcome.

Solution

Number of years = 10

Purchasing power in year 2025 = Nominal value in 2025 / (1 + Inflation rate)^{Number of years}

= $75,000 / (1.025)¹⁰

= $75,000 / 1.2801

= $58,589.17