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27 August, 11:07

Between 2005 and 2010

,

the average rate of inflation was about 4.7

%

per year. If a cart of groceries cost $130

in 2005, what did it cost in 2010

?

A cart of groceries cost approximately $nothing

in 2010

.

(Round to two decimal places as needed.)

+3
Answers (1)
  1. 27 August, 11:12
    0
    A cart of groceries that costed US$ 130 in 2005, costs US$ 163.56 in 2010 at an average rate of 4.7% of inflation.

    Step-by-step explanation:

    1. Let's review the data given to us for solving the question:

    Cost of cart of groceries in 2005 = US$ 130

    Period of inflation analysis = 5 years

    Inflation average rate = 4.7 % compounded annually

    2. Let's find the future value of the cost of a cart of groceries in 2010, using the following formula:

    FV = PV * (1 + i) ⁿ

    PV = Cost of cart of groceries in 2005 = US$ 130

    number of periods (n) = 5 (Period of inflation analysis = 5 years)

    Inflation average rate (i) = 4.7% = 0.047

    Replacing with the real values, we have:

    FV = 130 * (1 + 0.047) ⁵

    FV = 130 * (1.047) ⁵

    FV = 130 * 1.258152858

    FV = 163.56 (Rounding to two decimal places)
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