Padayappa has now retired after 40 years of employment. He just made an annual deposit to his investment portfolio and realized he has $2,400,000 (not counting home, cars, furniture, etc.). His money has been earning 7 percent per year, and inflation has been running 4 percent per year over the past 40 years. What equal amount of money did he put Into his Investment at the end of each year? $[ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is + -5. What is the buying power of his $2,400,000 in terms of a base 40 years ago? $[ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is + -50. If he could buy a TV 40 years ago for $500, what would a comparable one cost today if the consumer electronics inflation rate is -3 percent? Carry all interim calculations to S decimal places and then round your final answer to the nearest dollar. The tolerance Is + -1.

a. $12,022

b. $499,896

c. $148

Explanation:

a. What equal amount of money did he put Into his Investment at the end of each year?

Let the equal amount be represented by a.

Therefore, $2,400,000 = FV(7%,40,xa

Based on the information given in the question, we'll then use excel function,

a = PMT(7%, 40, 2400000)

= 12,022

Therefore, the equal amount of money did he put Into his Investment at the end of each year is $12022.

b. What is the buying power of his $2,400,000 in terms of a base 40 years ago?

Let the buying power be represented by x.

Based on the information given in the question,

x × (100% + 4%)^40 = 2,400,000

x × (1.04)^40 = 2400000

x × 4.8010 = 2400000

4.8010x = 2400000

x = 2400000/4.8010

x = 499,895.86

x = 499,896

Therefore, the buying power is $499,896.

c. If he could buy a TV 40 years ago for $500, what would a comparable one cost today if the consumer electronics inflation rate is -3 percent?

The price of TV today will be:

= $500 × (1 - 3%)^40

= $500 × (1 - 0.03)^40

= $500 × 0.97^40

= $500 × 0.29571

= $148

Therefore, the price of the tv will be $148

answer the law of increasing costs;