Table 2 above shows the inflation rate of any year to the references of any base year. Row 1 represents the year that the interest is on while column A represents the base year. For example the inflation rate of year 2000 in the reference year of 1995 will be 1.08 (P10). Take note that when the interested year is the same as the reference year, the inflation rate will always be 1 as the year is compared to itself.
To get the inflation rates in the reference year of 2006, few calculations were made. Firstly, the V21 will be 1 as it is compared to the year itself. To obtain the value of W21, the value of the year before (V21) is multiplied with the inflation rate of the year in percentage format, in this case 2.3 to 1.023. Hence this will produce a results of 1.023% (1.02 in Table 2 due to 2 decimal places). To obtain the value of X21, same procedure were done: 1.023 x 1.036 = 1.0598 (1.06 in Table 2).
To obtain the inflation rates of previous year, the inflation rate of the next year must be divided by the inflation rate in Table 3. For example, to obtain U21, 1.00 (V21) is divided by the inflation rate of year 2006 in percentage form which is 1.023. This will give U21 a value of 0.9775. To obtain the value of T21, same steps were repeated: 0.98 (U21) divided by 1.021 = 0.959. The calculations were repeated using macro command in Microsoft Excel until all of the values in Table 2 are filled.
Table 2 is very useful as the inflation rate of any interested year can be cross referenced to any base year. For instance, it is hard to estimate the inflation rate of year 2010 in the re...
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...doubt both interest rate and government bond give profit but the work in a very different way. To compare the profit given by both of them, a series of calculation were made. First of all, as the bond used was 10 years long, the interest rate period has to be taken as 10 years long as well for comparison. Secondly, as time passes, the value of money drops. Hence, the total devaluation of money after 10 years from year 1989 to year 2001 were calculated and tabulated in Table 8 below.
To calculate the total devaluation for bond profit after 10 years, the Inflation Adjuster Table (Table 2) was used. To obtain the total devaluation for year 1989, the sum of E13 to N13 were added: 0.73 + 0.78 + 0.84 + 0.88 + 0.90 + 0.92 + 0.94 + 0.97 + 0.98 + 1.00 = 8.94 (values slightly different due to significant numbers taken). The same procedure was done for all the years above.
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