Question

If the rate of inflation is 3.4% per year, the future price pt (in dollars) of a certain item can be modeled by the following exponential function, where t is the number of years from today.

pt = 2500(1.022t)
Find the current price of the item and the price 10 years from today.

Answer 1

The answer is "3107.75".

Explanation:

`\text{Rate of inflation} = (3.4 \%)/(year)`

`\to p(t)= 2500 (1.022)^t`

when t= 0

`\to p(0) = 2500(1.022)^0`

`= 2500 * 1\\\\= \$ 2500`

When t=10

`\to p(10)=2500(1.022)^(10)`

`= 2500 * 1.2431\\\\= 3107.75`