Question

"The function C(t)=C(1+r)t models the rise in the cost of a product that has a cost of C today, subject to an average yearly inflation rate of r for t years. If the average annual rate of inflation over the next 14 years is assumed to be 1.5%, what will the inflation-adjusted cost of a $285,700 boat be in 14 years? Round to two decimal places."

Answer 1

Answer:

$351,912.61

Explanation:

Data provided in the question:

function that models the rise in the cost of a product

$C(t)=C(1+r)^t$

C = $285,700

t = 14 years

r = 1.5% = 0.015

Now,

On substituting the respective values in the given function, we get

inflation-adjusted cost in 14 years i.e C(14) = $285,700(1 + 0.015)¹⁴

or

C(14) = $285,700 × 1.2317

or

C(14) = $351,912.61