Question

Hi, I am having hard time figuring this out. I need to understand the "how to" really well, so as much detail in the solving would be ideal.

Word problem: Tuition fees for California State University were $5,131 during the 2010-2011 academic year. Historically, tuition has increased at an 8% per year rate. Use the formula from Problem 83 to find what the tuition was 20 years ago and 30 years ago. Hint: First solve for P, then substitute the given value for F. Round to the nearest dollar. (equation in #83 to use here is F=P(1+r)² where F is the future price of an item priced at P dollars, r is the inflation rate expressed as a decimal, and t is the time in years)​
The given answers for this problem are: 20 years ago, tuition was $1,101 and 30 years ago tuition was $510.

Answer 1

For this problem we have:

• Initial value P = $5131
• Increase rate r = 8% or 0.08
• Time 20 years ago t = -20
• 30 years ago t = -30

Find the value of F using the formula and substitute the values:

• F(t) = P(1 + r)^t

• F(-20) = 5131(1 + 0.08)^(-20) = 1100.84685219 ≈ $1101

and

• F(-30) = 5131(1 + 0.08)^(-30) = 509.905093313 ≈ $510