Question

TELE

The function C(t) = C(1 + r)' models the rise in the cost of a product that has a cost of C today, subject to an average yearly inflation rate of r for t years. If the
average annual rate of inflation over the next 8 years is assumed to be 2.5 % , what will the inflation-adjusted cost of a $19,100 motorcycle be in 8 years? Round to two
decimal places.​

Answer 1

$23271.49

Explanation:

The function
`C(t) = C(1 + r)^(t)` models the rise in the cost of a product that has a cost of C today, subject to an average yearly inflation rate of r for t years.

Now, if the average annual rate of inflation over the next 8 years is assumed to be 2.5% then we have to find the inflation-adjusted cost of a $19100 motorcycle after 8 years.

Therefore, the cost will be
`C(8) = 19100(1 + (2.5)/(100) )^(8) = 23271.49` dollars. (Answer)