Question

9. The value of U.S. postage stamps increases ~5% per year. The current price is 55C. Estimate what the price will be in 20 years​

Answer 1

$1.46

Explanation:

We can use the principal of compound interest to solve this with the formula:

`A = P(1+(r)/(n))^(nt)`

where P = initial principal

r = interest rate

n = number of times applied per time period

t = time periods elapsed

In this specific case, P = 0.55, r = 0.05, n = 1, and t =20

`0.55(1+(0.05)/(1))^(1*20) = 0.55(1.05)^(20) = 0.55(2.65) = 1.46`