Question

I need help with these problems, I couldn’t figure it out.. and desperately need them to pass this assignment.

Answer 1

REcall that we are given the price at 2003, which was 49. Note that at year 2004, there was an increase of 5% of 49. To calculate the 5% of a number, we simply multiply the number by 5 and divide it by 100. So, the price at year 2004 would be

`49+(5)/(100)49`

Since we are told that each year there is a 5% increase of the initial price, this means that at year 2005 we would have another 5% extra. So the price at 2005 would be

`49+(5)/(100)49+(5)/(100)49=49\cdot(1+2\cdot(5)/(100))`

Note that 2005 is 2 years after 2003, so, based on the pattern we are discovering in this formula, we can say that n years after 2003 the price would be

`49\cdot(1+n\cdot(5)/(100))`

2014 is 11 years after 2003, so this means that n=11. If we replace the value of n, we have that the price at 2014 would be

`49\cdot(1+11\cdot(5)/(100))=75.95`

so the price at year 2014 would be 75.95