Question

Total replacement insurance coverage against breakage or loss is of a new laptop computer is $19 per month increasing by 5% per year. What is the cost per month in two years ?

Answer 1

The cost per month of replacement insurance of laptop is $20.94

Explanation:

Given as :

The initial cost of replacement insurance of laptop = $19 per months

The rate of increase = r = 5% yearly

The time period = 2 years

Let The cost per month in 2 years = $x

Now, According to question

The final insurance cost = The initial insurance cost ×
`(1+(\textrm rate)/(100))^(\textrm time)`

Or, The final insurance cost = $19 ×
`(1+(\textrm r)/(100))^(\textrm t)`

Or, The final insurance cost = $19 ×
`(1+(\textrm r)/(100))^(\textrm t)`

Or, The final insurance cost = $19 ×
`(1+(\textrm 5)/(100))^(\textrm 2)`

Or, x = $19 × (1.05)²

or, x = $19 × 1.1025

∴ x = $20.94

So, The cost per month in two years = x = $20.94

Hence The cost per month of replacement insurance of laptop is $20.94 Answer