Question

Between 2005 and 2010, the average rate of inflation was about 4.6% per year. If a cart of groceries cost $110 in 2005, what did it cost in 2010?

Answer 1

Compound interest formula:
F=P(1+i)^n
=110(1+.046)^5
=137.74

Answer 2

1+ rate of inflation=1.046
5 years=1.046^5
1.046^5=1.2522
1.2522 x 110=$137.74 as the cost of groceries in 2010
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