Previous 12m living expenses: 400,000
Expected to grow at inflation this year and each future year.
So calculating coming year’s expenses requires multiplying with 1.025 twice, once for current year and once again for the coming year, right??
CFAI doesn’t think so… multiplies once only
Can someone explain please
Previous Year 2017
Coming Year 2018
So needs multiplication by 1.025 ONLY 1 time!
You are at NOW
----------------------|-----------------------
PREVIOUS NOW COMING
DRAW A TIMELINE too … if that helps!
Previous 12 months: Jan 2017 through Dec 2017.
Coming year: Jan 2018 through Dec 2018.
Increase by 2.5% once.
Thanks chaps
It was simpler than I thought
My pleasure.