Question

The function C(t)=C0(1+r)^t models the rise in the cost of a product that has a cost of C0 today, subject to an average yearly inflation rate of r for t years. If the average annual rate of inflation over the next 5 years is assumed to be 2.5%, what will the inflation-adjusted cost of a $189 bicycle be in 5 years? Round to two decimal places.

Answer 1

do i solve it like C(5) = 189(1 + 0.25)^5

Answer 2

almost

the interest rate is 2.5% so it should be 0.025 not 0.25

Answer 3

ohh okay

C(5) = 189(1 + 0.025)^5

Answer 4

yup good, just chuck that into a calculator and you're good

Answer 5

42.76723044

Answer 6

hmm not quite, remember the bike is inflating in price. did you remember the exponent sign?

Answer 7

how do i put the result in as

$___________

Answer 8

189(1 + 0.025)^5 = 213.836152236328125

because we're dealing with money, round to the nearest 2 decimal places: $213.84

Answer 9

oh i'm sorry , i inserted it as C(5) = 189(1 + 0.025)^5 with the C(5) and you did it without it to solve it

Answer 10

do i put in $213.84 or $213.83 as a final answer ?

Answer 11

213.836152236328125 rounds to 213.84

Answer 12

that's right , okay thank you Vocaloid