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Example: Consider two annuities. The first annuity is fixed (unresponsive to general price inflation) and yields $2,000 per year in actual dollars for 10 years.
Example: Consider two annuities. The first annuity is fixed (unresponsive to general price inflation) and yields $2,000 per year in actual dollars for 10 years. The second annuity is of the same duration and yields enough future actual dollars to be equivalent to $2,000 per year in real dollars (purchasing power). Assume a general price inflation rate of 6% per year, pertinent values for the two annuities over a 10-year period are shown in the table
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