A Coca cola 5 cents A car 500 bucks These prices may seem

Last updated: 10/27/2023

A Coca cola 5 cents A car 500 bucks These prices may seem cheap but they were not back in the day This is due to inflation In a growing economy most goods and services increase in price over time to the tune of 2 3 each year The key is that workers wages also increase Thus a car may have only cost 500 at some point in the past but the average worker s salary was much much lower back then The inflation formula can be used to predict the future price of a good or service The inflation formula is given by FV PV 1 r t where FV is the future value of the good or service PV is the present value of the good or service r is the inflation rate and t is number of years desired Suppose the average loaf of bread costs 3 94 today and grocery inflation averages 1 75 per year Use the inflation formula to predict what an average loaf of bread will cost 36 years from now Round the solution to the nearest cent Suppose the average gallon of milk costs 3 54 today and milk inflation averages 2 10 per year Use the inflation formula to predict what an average gallon of milk will cost 15 years from now Round the solution to the nearest cent