Question

With the current economy, gas prices are now skyrocketing! The price of gas used to be $3.70, and it is increasing at a rate of 5% a week. How long until a gallon of gas will cost $4.80?

Answer 1

It will take 5.33 years for the price of gas to reach $4.8.-

Explanation:

Giving the following information:

Present value= $3.7

Future value= $4.8

Growth rate= 5%

To calculate the time required to reach $4.8, we need to use the following formula:

n= ln(FV/PV) / ln(1+g)

n= ln(4.8 / 3.7) / ln(1.05)

n= 5.33

It will take 5.33 years for the price of gas to reach $4.8.-