After World War II, a typical small home often sold for between $16,000 and $30,000.
Similar inflation characteristics can be demonstrated with housing prices.
While a significant portion of this increase is due to additional features on newer models, much of the increase is due to the inflation that occurred between 19. Today’s cheapest Mustang starts at a list price of $25,680. The first Ford Mustang sold in 1964 for $2,368. There is also, typically, the possibility of future inflation, which decreases the value of a dollar over time and could lead to a reduction in economic buying power.Īt this point, potential effects of inflation can probably best be demonstrated by a couple of examples. This is typically because a dollar today can be used now to earn more money in the future. The concept of the time value of money asserts that the value of a dollar today is worth more than the value of a dollar in the future. A major factor that affects their investment decisions is the concept of the time value of money.
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What should you do? Is there a benefit to spending it now as opposed to saving for later use? Does time have an impact on the value of your money in the future? Businesses are confronted with these questions and more when deciding how to allocate investment money. You have a choice: You can spend the money now or spend it in the future. Your mother gives you $100 cash for a birthday present, and says, “Spend it wisely.” You want to purchase the latest cellular telephone on the market but wonder if this is really the best use of your money.
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