Question

The rate of inflation is 3%. The cost of an item in future years can be found by iterating the function c(x) = 1.03x. Find the cost of a $1500 refigerator in three years if the rate of inflation remains consistant.

Answer 1

This is an expontential growth, which is a growth based on f(x) = b*a^x 
b = 1500
a = 1.03
x = 3

f(3)=1500*1.03^3 = 1639.10$

After three years the fridge would cost 1639.1$.