SOLUTION: The price of milk has been steadily increasing 5% per year. If the cost of a gallon is now $3.89: a. What will it cost in 10 years? b. What did it cost 5 years ago?

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Question 1111601: The price of milk has been steadily increasing 5% per year. If the cost of a gallon is now $3.89:
a. What will it cost in 10 years?
b. What did it cost 5 years ago?
Found 4 solutions by mananth, josgarithmetic, ikleyn, TeachMath:
Answer by mananth(16946)   (Show Source):
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This a problem of compound Interest calculation
Cost of milk nowl P = 3.89
Cost of milk after 10 years= A
years=n 10.00
compounded 1 times a year t
Rate = 5.00 0.05
Cost after 10 years = P*((n+r)/n)^n*t

Cost after 10 years = = 3.89 *( 1+0.05 )^1 * 10
Amount = 3.89 *( 1 + 0.05 )^ 10
3.89 *( 1.05 )^ 10.00
Cost after 10 years = $6.34
Cost 5 years ago
Principal P = 3.89
Amount= A
years=n 5.00
compounded 1 times a year t
Rate = -5.00 -0.05
Amount = P*((n+r)/n)^n*t

Amount = = 3.89 *( 1 + -0.05 )^ 1 * 5.00
Amount = 3.89 *( 1 + -0.05 )^ 5
3.89 *( 0.95 )^ 5.00
Cost 5 years ago = $3.01

Answer by josgarithmetic(39617)   (Show Source):
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5% per year, exponential growth

in ten more years

Answer by ikleyn(52781)   (Show Source):
You can put this solution on YOUR website!
.

Cost 5 years ago = where P is the current price. = = 3.05 dollars per gallon.

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Be aware: The answers AND the formulas of BOTH other tutors regarding the milk price per gallon 5 years ago are   W R O N G.

                My apologies for their illiteracy in such simple issue.

Answer by TeachMath(96)   (Show Source):
You can put this solution on YOUR website!
Price 5 years ago = P, and so: 3.89 = P(1 + .05)^5
P = 3.89/(1 + .05)^5 = 3.047292 = $3.05

No other answer is correct!