Could someone work out a sum for me x

Jagraf

Person A agrees to pay person B £1000 PCM, from June 2004. They also agree to increase this in line with inflation (or maybe decrease ...) I presume year on year.

Person A does not increase or reduce this amount in line with inflation, but pays £1000 each month only.

How much does person A owe person B, if any?

lulu_92

:think:


money.

why wasn't this worked out in 2005 when you realised they weren't paying the increase?

enjoyyourshoes

there requires clarification between a & b

what is the inflation measure they are working to, has that been agreed?

is it a monthly increase applied or 1/4ly.1/2 yearly or annual ?

Have they agreed that it is compound interest (i.e. interest on interest not paid?)?

enjoyyourshoes

Hi are A & B friends or was it a business relationship?

Without compounding the none paid interest and calculating annual increase based upon rpi figure is over £20K

here is RPI between those dates:-

2013 2 2012 2.5 2011 4.1 2010 4.1 2009 2 2008 0.5 2007 3.7 2006 4 2005 1.8 2004 3.2

Blackbeard_of_Perranporth

Rule according to BoP with regard annul pay increment.

If none offered, use feet.

enjoyyourshoes

with compound interest £24,493

Jagraf

enjoyyourshoes wrote: »

with compound interest £24,493

Thank you, I believe it is compound interest, and its two 'friends'. Thanks for all the figures.

enjoyyourshoes

Hi

I used retail price index

there are lots of other indices out here, one may be more applicable to their particular circumstances (depends if one is A or

That will affect the result

tripled

A rough calc from me using CPI, no interest (dump in a text file and import into a spreadsheet for nice formatting):

Year|CPI|Old Payment|New Payment|Actual Payment|Difference|Annualised Difference|Cumulative Annualised Difference|Cumulative Annualised Difference CPI Adjusted
2004|N/A|N/A|1000|1000|0|0|0|0
2005|2.1|1000|1021|1000|21|252|252|252
2006|2.3|1021|1044.483|1000|44.483|533.796|785.796|791.088
2007|2.3|1044.483|1068.506109|1000|68.506109|822.073308|1607.869308|1631.356332
2008|3.6|1068.506109|1106.972329|1000|106.9723289|1283.667947|2891.537255|2952.545475
2009|2.2|1106.972329|1131.32572|1000|131.3257202|1575.908642|4467.445897|4634.745754
2010|3.3|1131.32572|1168.659469|1000|168.6594689|2023.913627|6491.359524|6760.623787
2011|4.5|1168.659469|1221.249145|1000|221.249145|2654.98974|9146.349264|9638.714113
2012|2.8|1221.249145|1255.444121|1000|255.4441211|3065.329453|12211.67872|13137.7857
2013|2.6|1255.444121|1288.085668|1000|288.0856682|3457.028019|15668.70674|16962.67172
2014*|1.5|1288.085668|1307.406953|1000|307.4069533|3688.883439|19357.59018|21092.58462
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http://www.ons.gov.uk/ons/datasets-and-tables/data-selector.html?cdid=D7G7&dataset=mm23&table-id=1.2||||||||
*2014: http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/may-2014/stb---consumer-price-indices---may-2014.html||||||||

TL;DR: £21092.58

As you can probably see already, factors such as inflation rate used (and even which timing), when the rate change is applied, and whether there is interest, affects the calculations significantly.