Somethg to ponder bila discuss psl kenaikan inflasi ex kenaikan 10% minyak n harga barang, so i explained in class based on my 1990 as fresh grad salary vs 2014 ftesh grads salary.. F=P(1+I)^N Where: F=Future value ($) P=Present value ($) N=No of yrs I=interest rate per yr (%) or increment rate per yr (%) or inflation rate per yr (%) Change title of above formula: I =[(F/P)^(1/N)]-1 N=log (F/P)/log (1+I) Example: 1990 fresh grad salary $ 1500 2014 fresh grad salary $ 2500 Q1: Who are richer? 1990 fresh grads with rm1500 or 2014 fresh grafs with rm2500? So calculate I: I=[(F/P)^(1/N)]-1 I=[($2500/$1500)^(1/24) ]-1 I=2.15% Meaning.. a fresh grad appreciated at a rate of 2.15% only every yr..whereby the msian nationwide inflation abt 5%/yr. Q2: So if nowadays grad dpt $2500,how much tht value in 1990 if msia nationwide inflation is 5%? F=P (1+I)^N Thus P=F/(1+I)^N P=$2500/(1+5%)^24 P=$ 775 Meaning... if in 1990..my salary was $1500, with yr salary now $2500, the $2500 only equivalent to $775 in 1990. Conclusion: nowadays grads are suffering more thn old grads cause the inflation is higher thn a grads appreciation. By right due to the nationwide inflation of 5% , equivalent salary tht nowadays grad shd get is: F=P (1+I)^N=$1500 (1+5%)^24 F=$ 4837 Meaning..the purchasing power of 1990 $1500 = 2014 $ 4837 (sama status economy)
Posted on: Sun, 12 Oct 2014 14:10:37 +0000
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