SOLUTION: Here is the problem: A certain item costs $4.75. Due to inflation, experts estimate the cost will increase by 2% per year. Approximately how many years until the item costs $7.2

Question 960998: Here is the problem:
A certain item costs $4.75. Due to inflation, experts estimate the cost will increase by 2% per year. Approximately how many years until the item costs $7.20?
Do I use the growth formula to solve???
Q(t) = C * (1+r/t)^t
Solve for t to get the answer???
Answer by harpazo(655) (Show Source): You can put this solution on YOUR website!

As it is not compounded in a year, the general formula will be FV = PV * (1 + r)^t
FV will be the future value where PV is the present value. r is the the rate (per year) and t shows the years.
7.20 = 4.75 * (1 + 0.02)^t
(1.02)^t = 7.2/4.75
ln (1.02)^t = ln (7.2/4.75)
t = ln (7.2/4.75) / ln (1.02)

t ≈ 21.004
=> after 21 years
Check this page please
http://www.calculatorsoup.com/calculators/financial/future-value-investment-calculator.php
If we enter the values P = 4.75, R = 2 and t = 21, the result will be 21 years. (m is 1 as the rate isn't compounded)
RELATED QUESTIONS
The rate of inflation measures the percentage increase in the price of consumer goods.... (answered by Boreal,ikleyn)

An item presently costs P 1,000. If the inflation rate is 8% per year, which of the... (answered by ikleyn)

Ten years ago, an item cost $2,500. The rate of inflation for the first 4 years was 4%,... (answered by ikleyn)

inflation is causing things to cost roughly 2 percent more per year. A bag of milk cost... (answered by josgarithmetic,ikleyn)

Assuming continuous compounding, what will it cost to buy a $35 item in 2 years at the... (answered by stanbon,Alan3354)

A product currently sells for $12 per unit. The variable cost are $4 per unit, and 10,000 (answered by lynnlo)

A father is planning a savings program to put his daughter through college. His daughter (answered by Theo)

If the rate of inflation is 3.4% per year, the future price pt (in dollars) of a... (answered by stanbon)

Problem: Shenequa has narrowed her choice for which college to attend. She is most... (answered by Fombitz)