Question

The inflation rate of the u.s. dollar is 3.7 percent. what this means is that every year, prices increase by 3.7 percent. If a quart of oil cost $1.69 five years ago, how much does it cost now?.

Answer 1

1.69×(1.037)5..................

Answer 2

After n years, the price of a good in US in calculated through the equation,
                                      an = (a1) x (1 + r)^n
Substituting the known values from the given,
                                      an = ($1.69) x (1 + 0.037)^5 = $2.03
Thus, the oil will cost $2.03 today.