You win a prize . You will not get any money today. In 40 years you will be given a cheque for $1,000,000. Consider two cases:

1. Inflation is expected to be 2.5% p.a.,

2. Inflation is expected to be 5.0% p.a.

What will the purchasing power of the prize be in 40 years (using todays dollars) for the two scenarios listed above?

(If a muffin costs $1 today, how many muffins will you be able to purchase in 40 years).