Question

Inflation causes things to cost more, and for our money to buy less (hence your grandparents saying "In my day, you could buy a cup of coffee for a nickel"). Suppose inflation decreases the value of money by 2% each year. In other words, if you have $1 this year, next year it will only buy you $0.98 worth of stuff. How much will $100 buy you in 15 years?

Answer 1

Answer:

$73.85

Step-by-step explanation:

Data provided in the question:

Inflation rate = 2% = 0.02

Amount = $100

Time = 15 years

Now,

The reduced amount = Amount × (1 - Inflation rate)ⁿ

here, n is the time in years

Therefore,

on substituting the respective values, we get

The reduced amount = $100 × ( 1 - 0.02 )¹⁵

or

The reduced amount = $73.85

Answer 2

The amount should be $73.85

Calculation of the amount:

Since

Inflation rate = 2% = 0.02

Amount = $100

Time = 15 years

Now we know that

The reduced amount = Amount × (1 - Inflation rate)ⁿ

= $100 × ( 1 - 0.02 )¹⁵

= $73.85

Learn more about the inflation here: https://brainly.com/question/24663100