Question

Suppose the retail price of an automobile was 20,000 in 1992 and that it increased at 5%per year. What is the fubction that models the retail price of the automobile t years after 1992

Answer 1

`20000*1.05^t`

Explanation:

If the retail price in 1992 is $20,000

It increases at 5% per year

The Price After 1 year = 20000+ (5% of 20000) = 105% of 20000=20000*1.05

The Price After 2 years =
`(20000*1.05)+(5\% \:of\: 20000*1.05)=(1.05)(20000*1.05)=(20000*1.05^2)`

Continuing in like manner, after t years

The retail price
`=20000*1.05^t`