1. Determining the Inflation Rate. In 2000, selected automobiles had a

QUESTION

1. Determining the Inflation Rate. In 2000, selected automobiles had an average cost of $16,000. The average cost of those same automobiles is now $28,000. What was the rate of increase for these automobiles between the two time periods?
2. Computing Future Living Expenses. A family spends $36,000 a year for living expenses. If prices increase by 2 percent a year for the next three years, what amount will the family need for their living expenses after three years?
1. Increase rate = (28000-16000)/16000 = 75% 2. Amount¦

d after 3 years = 36000*1.02^3 = 38203.49

ANSWER:

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