Question

The function (1) = Col + r) models the rise in the cost of a product that has a cost of Co today, subject to an average yearly inflation rate of r for years. If the average annual rate of inflation over the next 11 years is assumed to be 2.5 8. what will the inflation-adjusted cost of a $184.300 boat be in ll years?

Answer 1

The student inquired about calculating the future cost of a $184,300 boat, with a 2.5% average annual rate of inflation over 11 years. The calculation is performed using the formula, resulting in the inflation-adjusted cost in 11 years.

Step-by-step explanation:

The student is asking about how to calculate the future cost of a product given the current cost and an average annual rate of inflation. In this case, the product is a $184,300 boat, and the average yearly inflation rate is 2.5% over 11 years. To find the inflation-adjusted cost, you can use the provided formula (1 + r)^n, where C0 is the current boat cost, r is the inflation rate as a decimal, and n is the number of years. The inflation-adjusted cost will be:

C0 * (1 + r)^n

$184,300 * (1 + 0.025)^11

This calculation will give us the future cost of the boat in 11 years accounting for the 2.5% inflation each year.