SOLUTION: The rate of inflation measures the percentage increase in the price of consumer goods. The rate of inflation in the year 2014 was 2% per year. To get a sense of what this rate woul

Question 1168365: The rate of inflation measures the percentage increase in the price of consumer goods. The rate of inflation in the year 2014 was 2% per year. To get a sense of what this rate would mean in the long run, let's suppose that it persists through 2034.
What would be the cost in 2015 of an item that costs $300 in 2014? (Round your answer to the nearest cent.)
Found 2 solutions by Boreal, ikleyn:
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
This is 300(1.02)=$306 in 2015, which is what was asked.
If it is 2035, rather than 2015, then it is 300(1.02)^20=$445.78.
Answer by ikleyn(52803) (Show Source): You can put this solution on YOUR website!
.

Why we should "suppose that it persists through 2034",

while the question relates to the year 2015 only ?

RELATED QUESTIONS
The Consumer Price Index (CPI) is calculated by the U.S. Department of Labor. It is a... (answered by josgarithmetic)
Ten years ago, an item cost $2,500. The rate of inflation for the first 4 years was 4%,... (answered by ikleyn)
From Table 21.5, you can determine the rate of inflation from one year to the next. For... (answered by Edwin McCravy)
Sara has $100 dollars in currency and 2,000 in a bank account which the bank pays no... (answered by JulietG)
I am a parent trying to help a student. Please help. The problem: Total healthcare in... (answered by ikleyn)
Is it 1.01325? I want to check my answer. Topic: Financial Mathematics Round your... (answered by ikleyn)
A pair of women's running shoes cost $110 in 2004 and the same shoes cost $130 in 2009... (answered by Theo)
The 2006 price of a certain type of car is $24,600. Estimate the price of the same car in (answered by Boreal)
Goods costing $18.16 at the beginning of the year 1957 cost $174.18 at the beginning of... (answered by jorel555)