jimbocoin on Nostr: Ever wanted to calculate the inflation rate of something quickly? Here’s how! ...

Ever wanted to calculate the inflation rate of something quickly? Here’s how!

(Requirements: a calculator with a 1/x button and an x^y button, like the iPhone calculator app in wide mode).

Inputs:
• start price
• final price
• years between

Procedure:
• Enter the final price
• Hit ➗
• Enter the start price
• Hit 🟰
• Hit the “x^y” button
• Enter the years
• Hit the “1/x” button.
• Hit 🟰

At this point, you’re looking at the proportional value for annualized inflation. So 1.25 means +25%, etc.

That’s it! This is a memorizable procedure once you’ve done it a few times.

Example: Suppose a home is listed for $700k, and was last sold for $500k five years ago.

• Enter 7️⃣0️⃣0️⃣0️⃣0️⃣0️⃣
• Hit ➗
• Enter 5️⃣0️⃣0️⃣0️⃣0️⃣0️⃣
• Hit 🟰 (calculator reads 1.4)
• Hit “x^y” button
• Enter 5️⃣
• Hit “1/x” button (calculator reads 0.2)
• Hit 🟰

Final result: 1.069610…

Converted to percentage: +6.96%

So the hypothetical house in question has appreciated at a compound annual growth rate (CAGR) of about 7%. Considering the money supply increases by 8-12% per year, it is underperforming slightly, but still a decent store of value. #math