I'm having problem coming up with a way to express the recursive(compound?) nature of the inflation. Monthly the payment \$38.19 is decreasing in "today's month" value but just how much its decreasing is not linear so I'm looking for help for an equation to describe this relation.
For example: If little Jeff wants to buy a house for \$10000 dollars and he borrows \$8000 from the bank, with annual interest rate at 4.00%. say the term of this loan is 30 years and his monthly payment is \$38.19 and supposedly after 360 payments(30 years) he would had paid \$13,749.56. But how much does the loan really cost him in today money if we assume a consistent annual inflation rate of 3%. *Please note that since payment is made monthly so annual inflation rate need to be used monthly also, 3% will translate to .25%.