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How to Calculate Real Income | Personal Finance Series

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Subscribe to Alanis Business Academy on YouTube for updates on the latest videos: https://www.youtube.com/alanisbusinessacademy?sub_confirmation=1 In this brief video we’re going to learn how to calculate what is known as “real income.” Real income adjusts for inflation and is a better gauge of purchasing power than ordinary income. Below is the question we’ll be solving in this video if you’d like to follow along. “If your income increased from $23,000 to $26,000 during a period when the rate of inflation was 4 percent, your real income after the raise was __________.”
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Text Comments (5)
Its OKay (1 month ago)
Can we calculate the percentage change between "PV" and "FV" and call it Nominal Income: Therefore, it would be: 13.04% And since Nominal Income = Real Income + i given: i = 4% Therefore, Real Income = 9.04% 23000 + (23000 * 9.04%) = 25079.2 Is this correct?
alisher supygaliyev (5 months ago)
24000/1.04=23076 ROFL Nice mistake there D:
Sara Arnesen (1 month ago)
260000/1.04 ...
alvaro gonzalez (7 months ago)
How do we get to 1.04 from 0.04? Dont get that part
Alanis Business Academy (5 months ago)
You add 1 to the interest rate after converting it into decimal form.

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