Any Financial/Mathematical Genius Here?

by Asher
5 replies
Hi guys,

I need a bit of help... for the financial and mathematical
gurus/genius, this will be a breeze.

Okay, I would like to know what is the value of a dollar
in the 1900s... in today's dollar? Is there a place where
I can find out the answer?

Assuming just 1% growth throughout all these years to
today... how much would $1 back then be worth today?

Is there like a site somewhere I can ask more specific
years for this?

#financial or mathematical #genius
  • Profile picture of the author Sylvia Meier
    Well I think it would work just like compounding interest, so this would be the formula for it, Total Amount = P(1+(R/100))n which taking it by your figure of 1% annually would make it worth $2.96, but I would assume some years would have more growth to them then just 1%.

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  • Profile picture of the author Sylvia Meier
    Or if you want to take the more technical side of it, one dollar has depreciated significantly, because one dollar back then would have the same purchase power as say $20 today, due to inflation and the raising cost of goods.

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  • Profile picture of the author PlaneWryter
    Hey Asher,

    What a coincidence, I just put my MBA in Finance to work to answer the same question.

    Even without knowing your need for accuracy, you'll benefit from knowing that "Inflation" is one of those terms which everyone uses as if they knew what it meant...yet very, very few folks actually do.

    Just a couple of cautions, then a suggestion:

    Inflation is very variable. There isn't "a" rate; there are "many" rates.
    Inflation has many components...each is measured (to varying degrees) using different methodologies (examples include the nearly dozen ways to count the money supply).
    For example, the "Producer Price Index" is considerably different from the "Consumer Price Index" yet both are used to assert inflation.

    If accuracy isn't important for your application, then this doesn't matter. If accuracy is important--especially if the presumed reader of whatever you are going to write is knowledgeable in this area--then these distinction matter...and matter a great deal.

    Here's a link to the US Bureau of Labor Statistics CPI calculator (which is what I used two weeks ago when I had to answer the same question). NOTE: this calculator starts in 1913. That may be a limitation for you.

    CPI Inflation Calculator

    Hope this helps.

    Good hunting out there,
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  • Profile picture of the author sf_Imtiaz
    "Current data is only available till 2008. $26.45 in the year 2008 has the same "purchase power" as $1 in the year 1900." i fetched it from this website Measuring Worth - Purchasing Power of US Dollar
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