Question

assume the rate of inflation os 5% per year for the next 2 years. what will be the cost of goods 2 years from now, adjusted for inflation if the goods cost $420.00 today? (round to the nearest cent)

Answer 1

$463.05

Step-by-step explanation

Given the following

Cost of good = $420.00

Percent inflation yearly = 5%

Cost of the good at the end of first year = 105% OF $420.00

Cost of the good at the end of first year = 1.05 * 420

Cost of the good at the end of first year = $441

At the end of the second year;

cost of good = 105% of $441

cost of good = 1.05 * 441

cost of good = $463.05

Hence the cost of the good after 2 years will be $463.05