Professor Smith has invented a time Machine and is going to

Professor Smith has invented a time Machine and is going to travel back in time 15 years to buy his wife a diamond ring.

The ring today would cost $10000.

The average rate of inflation is 5.44% per year.

Round answer to nearest whole money.

How much money should the Professor bring with him to purchase this ring---------------?

Solution

S=C(1+r)^t

where C = the value t years ago,
R = the annual inflation rate, and
S = the inflated value today.

10000 = C (1+0.0544)^(15)

10000 = C x 2.2135

C = $4517.732