Calculates changes in purchasing power over time,
taking into account the real interest rate.
Usage
calc_purchasing_power(x, years, real_interest_rate)
Arguments
- x
A numeric. The initial amount of money.
- years
A numeric. The number of years.
- real_interest_rate
A numeric. The yearly real interest rate.
Value
A numeric. The purchasing power.
Details
The real interest rate is the interest rate after inflation.
If negative (e.g. equal to the average yearly inflation rate)
it can show diminishing purchasing power over time.
If positive, it can show increasing purchasing power over time,
and effect of compounding interest on the purchasing power.
Examples
calc_purchasing_power(x = 10, years = 30, real_interest_rate = -0.02)
#> [1] 5.520709
calc_purchasing_power(x = 10, years = 30, real_interest_rate = 0.02)
#> [1] 18.11362
