Question

Average health premiums have been increasing at a rate of 9% per year. if an average family's premiums are $10,630 this year, what will they be in 6 years? if necessary, round your answer to the nearest cent.

Answer 1

The family's health premiums will be approximately $16,986.79 in 6 years.

Step-by-step explanation:

To find the family's health premiums in 6 years, we need to calculate the future value of the premiums using the given annual growth rate of 9%. We can use the formula for compound interest to calculate this:

Future Value = Present Value x (1 + interest rate)^number of periods

Given that the present value (this year's premium) is $10,630, the interest rate is 9% (0.09), and the number of periods is 6 years, we can plug in these values:

Future Value = $10,630 x (1 + 0.09)^6

Using a calculator, the future value comes out to be approximately $16,986.79.