Question

If prices increase at a monthly rate of 2.7 by what do they increase in a year

Answer 1

37.67%

Explanation:

Suppose initially a price of $ 100

Increasing per month at a rate of 2.7%. Which is equal to 0.027

Now applying the formula:

Vf = Vi * (1 + m) ^ n

where Vf is the final quantity, Vi is the initial value, m is the rate and n is the number of months.

We know that 1 year, is 12 months, since the rate is monthly means, n = 12, we replace:

Vf = 100 * (1 + 0.027) ^ 12

Vf = 137.67

It means price increase in 1 year = 137.67 - 100 = 37.67

Which means that n a year increases to 37.67%