Question

The cost of manufactured goods is rising at the rate of inflation, or at about 2.3% 2.3 % . Suppose an item costs $12 $ 12 today. How much will it cost five years from now due to inflation? Round the answer to the hundredth.

Answer 1

Answer: $13.44

Explanation:

Inflation is causing the manufactured goods to rise at 2.3% per year. The price in 5 years can be calculated using compound interest formula:

= 12 * ( 1 + 2.3%)⁵

= ‭13.444956907696116‬

= $13.44