Question

Between 2005 and 2010

​,
the average rate of inflation was about 4.3
​%
per year. If a cart of groceries cost ​$160

in​ 2005, what did it cost in 2010
​?
A cart of groceries cost approximately ​nothing

in 2010
.

Answer 1

A cart of groceries that costed US$ 160 in 2005, costs US$ 197.49 in 2010 at an average rate of 4.3% of inflation.

Explanation:

1. Let's review the data given to us for solving the question:

Cost of cart of groceries in 2005 = US$ 160

Period of inflation analysis = 5 years

Inflation average rate = 4.3 % compounded annually

2. Let's find the future value of the cost of a cart of groceries in 2010, using the following formula:

FV = PV * (1 + i) ⁿ

PV = Cost of cart of groceries in 2005 = US$ 160

number of periods (n) = 5 (Period of inflation analysis = 5 years)

Inflation average rate (i) = 4.3% = 0.043

Replacing with the real values, we have:

FV = 160 * (1 + 0.043) ⁵

FV = 160 * (1.043) ⁵

FV = 160 * 1.234302311

FV = 197.49 (Rounding to two decimal places)

Note : Same answer to question 14111742 answered by me.