You Expect a 3% Rate of Inflation to Continue Indefinitely

question 36

Multiple Choice

You expect a 3% rate of inflation to continue indefinitely into the future.A $10,000 vacation today will cost $________ twenty years from now.(Table or calculator required. )

• A)10,300
• B)14,988
• C)18,061
• D)42,944

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Definitions:

Passive Activity

Economic activities in which the taxpayer does not materially participate, often producing income subject to special tax rules.

Materially Participate

Involvement in the operations of a business or activity in a regular, continuous, and substantial way, affecting the tax consequences.

AMT Tax Rate

The percentage applied to compute the Alternative Minimum Tax, ensuring that taxpayers pay a minimum amount of tax.

Qualified Nonrecourse Financing

Debt financing for which the borrower is not personally liable and which is secured by real property used in the borrower’s trade or business.