Anayah's investment is expected to grow to $50,000 in 15 years. The current CPI is 110 , and the expected CPI in 15 years is 160 What is the present value of the $50,000 in today's dollars? Use this formula to calculate the present value using CPI: present value is equal to the fraction with numerator future value and denominator future CPI over current CPI
Divide the future value by the ratio of the future CPI to the current CPI: $50,000 ÷ (160 ÷ 110) = $34,375. So the investment’s present value in today’s dollars is $34,375, choice A.
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