Question

A dozen box of bagels costs $4.98. Because of inflation the price increases by 4% a year.

1. Write an equation to model the growth in the price of bagels.
2. use your equation to predict how much the bagels will cost 3 years from now.
3. Use your equation to predict when the price will exceed $7.50.

Answer 1

A=p (1+r)^t
A future value
P present value 4.98
R rate 0.04
T time

After 3 years
A=4.98×(1+0.04)^(3)
A=5.60

7.50=4.98 (1.04)^t
Solve for t
T=log(7.50÷4.98)÷log(1.04)
T=10 years

Hope it helps:-)