Question

If Melinda Miller estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%, what should her weekly grocery bill be in 3 years?

A) $100.00 B) $112.00 C) $112.50 D) $114.00 E) $121.60

Answer 1

The correct answer is C) $112.50.

Explanation:

The problem requires us to calculate future weekly bill that melinda miller will pay after 3 years if inflation rates is 4%. This can easily be calculated using compound factor formula.

Future value = Present value (1+I%)^n

Future value = 100 (1+4%)^3

Future value = 112.5 dollars