A family spends $40,000 on living expenses. With an annual inflation rate of 6 percent, they can expect to spend approximately _

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A family spends $40,000 on living expenses. With an annual inflation rate of 6 percent, they can expect to spend approximately _

______ in one year. Use Exhibit 1-A. (Round time value factors to 3 decimal places and final answer to the nearest dollar amount.) M

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1 answer:

il63 [147K] · Answer 1 · 2022-03-06T14:34:13+03:00

Answer: $42,400

Explanation:

The family currently spends $40,000 on living expenses.

Inflation is expected to be 6% and as Inflation is used to refer to the general rise in prices, this means that the family will be spending 6% more in one year.

They will therefore be spending;

= 40,000 * (1 + 6%)

= $42,400