Question

Assume the rate of inflation is ​8% per year for the next 2 years. What will be the cost of goods 2 years from​ now, adjusted for​ inflation, if the goods cost ​$280.00 ​today?

Answer 1

Answer: $326.59

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Work Shown:

F = future value

P = present value = 280

r = rate of inflation in decimal form = 0.08

t = elapsed time in years = 2

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F = P*(1+r)^t

F = 280*(1+0.08)^2

F = 326.592

F = 326.59