Bush Word Problem?

A president starts with an investment of $10,587.59 and after 7.75 years turns it into $8,451.19 AND the money loses 4% each year due to inflation.

What is the net gain or loss of his investment?

Answer: 51.2% LOSS

Why:

Inflation at 4% X 7.75 years is 31%

So 10,587.59 X 1.31 is $13,869.74 to keep value up with inflation.

Subtract the current value of $8,451.19 for a loss of $5,451.19.

Divide the loss ($5,451.19) by the inital value ($10,587.59) and you get:

51.2% LOSS