# Do You Know What a \$3,000 Expenditure in 1972 Costs Today?

Simply out of curiosity, I opened the real estate calculator I recently developed just to know what a \$3,000 expenditure I made in 1972 to take my family on a two-week  road trip across the United States would cost me today due to inflation. And I was surprised to discover that that same trip, if I were to take it in 2011, would cost me \$16,214.50. That’s because there has been a whopping 440.5% increase in the inflation rate since 1972.

How discouraging is that?

Of course there are a multitude of other scenarios that I was curious enough to run on the inflation rate but I won’t bore you with those results. Just let me say that in every case I was surprised to discover just how much our dollar has shrunk in value from the “good old days” and how little a dollar buys us today compared to yesterday. Nonetheless, it was a little bit of fun, too, I must admit.

What is the Inflation Rate?

Inflation Rate is the annualized percentage change in a general price index (normally the Consumer Price Index)  that is used to measure price inflation over time. The Consumer Price Index (CPI) is published by the Bureau of Labor Statistics (BLS).

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It’s much easier than using a hand-held financial calculator, light years faster, and it displays the descriptions and formulas associated with the calculation, so you can learn about the nuances of real estate investment as you calculate.

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• Present Values
• Future Values
• Depreciation (cost recovery)
• Cash Flow After Tax (CFAT)
• Sale Proceeds After Taxes
• Return on Equity (ROE)
• Internal Rate of Return (IRR)
• Net Present Value (NPV)
• Cap Rate
• Cash on Cash Return (COC)
• Maximum price you should pay for a property based on your cash down payment, desired monthly payment, and loan terms

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