Question

If the rate of inflation is 3.7% per year, the future price p(r) (in dollars) of a certain item can be modeled by the following exponential function, where is the number of years from today

Answer 1

We are given the following function:

`P(t)=3000(1.037)^t`

To determine the current price we will substitute the value "t = 0". We get:

`\begin{gathered} P(0)=3000(1.037)^0 \\ P(0)=3000(1) \\ P(0)=3000 \end{gathered}`

Therefore, the current price is 3000.

Now, to determine the price 10 years from today we will substitute "t = 10":

`P(10)=3000(1.037)^(10)`

Solving the operations:

`P(10)=4314`

Therefore, the price 10 years from now is $4314