document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=81618>Question 81618</A>: <I><SPAN STYLE=\"word-break: break-all;\"> In 1944 a stamp for first-class postage cost 3 cents. By the end of 2001, the cost of first-class postage will increase 35 cents. Assuming that the average annual rate of inflation was 5% for the period, is 35 cents a reasonable price in 2001? If not, what should the price be?\r<BR>\n" );
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document.write( "Could anyone please explain this to me? Thanks. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #58436 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=58436\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> In 1944 a stamp for first-class postage cost 3 cents. By the end of 2001, the cost of first-class postage will increase 35 cents. Assuming that the average annual rate of inflation was 5% for the period, is 35 cents a reasonable price in 2001? If not, what should the price be?<BR>\n" );
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document.write( "A(t) = A(o)(1.05)^t<BR>\n" );
document.write( "'44 to '01 is 57 years<BR>\n" );
document.write( "A(t) = 0.03(1.05)^57<BR>\n" );
document.write( "A(t) = 0.03*16.14 = 0.48 or 48 cents<BR>\n" );
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document.write( "At an annual inflation rate of 5% per year for 57 years<BR>\n" );
document.write( "a 3 cent stamp  in 1944 would cost 48 cents in 2001.<BR>\n" );
document.write( "So, it look like 35 cents is a bargain.<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H. </SPAN>\n" );
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