Question

Many economists view a 3% annual inflation rate as "acceptable". Assuming a 3% annual increase in the price of automobiles, how much will a new Suburban cost you 5 years from now, if today's price is $38,000?

Answer 1

suburban cost = 44052.41

Step-by-step explanation:

given data

annual inflation rate = 3%

time = 5 year

today's price = $38,000

to find out

suburban cost

solution

we get here suburban cost that is

suburban cost = today's price ×
`(1+r)^(t)` .................1

put here value and we get

suburban cost = $38,000 ×
`(1+0.03)^(5)`

suburban cost = 44052.41