【正文】 00 7,000 % change = = 1 new value original value original value new value original value The ratio of 5 to 20 is or 5 20 BOS Copyright169。 Company, Inc. 8 CU7112997ECA Bain Math Inflation . Price Deflators *1996 is the base year Note: These are the . Price Deflators which WEFA Group has forecasted through the year 2020. The library has purchased this time series for all Bain employees to use. Ye a r 1 9 9 6 = 1 0 0 * % C h a n g e Ye a r 1 9 9 6 = 1 0 0 * % C h a n g e1970 27 . 79 5. 32 1996 10 0. 00 1. 95 1971 29 . 23 5. 18 1997 10 1. 97 1. 97 1972 30 . 46 4. 23 1998 10 4. 48 2. 46 1973 32 . 18 5. 64 1999 10 7. 10 2. 51 1974 35 . 07 8. 99 2022 10 9. 80 2. 52 1975 38 . 36 9. 37 2022 11 2. 51 2. 47 1976 40 . 61 5. 86 2022 11 5. 41 2. 58 1977 43 . 23 6. 45 2022 11 8. 58 2. 75 1978 46 . 37 7. 26 2022 12 2. 02 2. 90 1979 50 . 35 8. 58 2022 12 5. 65 2. 97 1980 55 . 00 9. 25 2022 12 9. 31 2. 92 1981 60 . 18 9. 41 2022 13 2. 96 2. 82 1982 63 . 97 6. 30 2022 13 6. 57 2. 71 1983 66 . 68 4. 24 2022 14 0. 26 2. 70 1984 69 . 21 3. 79 2022 14 4. 06 2. 71 1985 71 . 59 3. 43 2022 14 7. 89 2. 65 1986 73 . 46 2. 62 2022 15 1. 90 2. 72 1987 75 . 71 3. 06 2022 15 6. 05 2. 73 1988 78 . 48 3. 65 2022 16 0. 29 2. 72 1989 81 . 79 4. 22 2022 16 4. 73 2. 76 1990 85 . 34 4. 34 2022 16 9. 25 2. 75 1991 88 . 72 3. 97 2022 17 3. 83 2. 71 1992 91 . 16 2. 75 2022 17 8. 53 2. 70 1993 93 . 54 2. 62 2022 18 3. 33 2. 69 1994 95 . 67 2. 28 2020 18 8. 31 2. 71 1995 98 . 08 2. 51 A deflator table lists price deflators for a number of years. BOS Copyright169。 Company, Inc. 10 CU7112997ECA Bain Math Inflation Example (1) (1970 1992) Adjusting for inflation is critical for any analysis looking at prices over time. In nominal dollars, GE’s washer prices have increased by an average of % since 1970. When you use nominal dollars, it is impossible to tell how much of the price increase was due to inflation. $2,000 72 Nominal dollars % Price of a GE Washer 1970 71 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 $0 $500 $1,000 $1,500 CAGR BOS Copyright169。 Company, Inc. 12 CU7112997ECA Bain Math Inflation Exercise (1) Consider the following revenue stream in nominal dollars: Revenue ($ million) 1990 1991 1992 1993 1994 1995 1996 How do we calculate the revenue stream in real dollars? BOS Copyright169。 Company, Inc. 14 CU7112997ECA Bain Math Foreign Exchange Definitions Investments employed in making payments between countries (., paper currency, notes, checks, bills of exchange, and electronic notifications of international debits and credits) Price at which one country’s currency can be converted into another’s The interest and inflation rates of a given currency determine the value of holding money in that currency relative to in other currencies. In efficient international markets, exchange rates will adjust to pensate for differences in interest and inflation rates between currencies Foreign Exchange: Exchange Rate: BOS