Saving
Real value of a future amount
Discount a future amount back to today's purchasing power using inflation as the discount rate.
The Formula
Real = nominal / (1 + i)^t
Discount a future amount back to today's purchasing power using inflation as the discount rate.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| i | Inflation rate | rate | Annual rate as a decimal. |
| t | Years | count | Number of years. |
What Each Symbol Means
irate
Inflation rate
Annual rate as a decimal.
tcount
Years
Number of years.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate inflation adjusted value page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Inflation Adjusted Value, filed under Finance. Every number the guide produces comes from substituting into this one line.