00:01
This problem says we want to find the cost of a cd in 10 years and we're assuming an inflation rate of 3 .5 % and we have a present cost of $16 .95.
00:10
So the answer to this question is going to kind of depend on if our inflation rate that we're given is per year or if it's 10 years at this 3 .5 % that's occurring over the 10 years.
00:26
So after 10 years have passed, this is the inflation rate we see.
00:29
If that's the case where our present cost is just going to increase by 3 .5 % for one time for this 10 years, that would be 16 .95 times 1, which represents 100 % of our cost, plus 0 .035, which is the decimal representation of 3 .5%, just like 1 is the decimal representation of 100%.
00:53
And again, if we are looking at this rate of 3 .5 % as just how much it goes up one time in this 10 years, we would do 16 .95 for our original cost times 1 .035, which again will increase our 100 % of our price by 3 .5%.
01:12
And the result there comes out to $17 .54325.
01:18
So round it to the nearest cent, that would be $17 .54.
01:23
If this inflation rate is happening per year, so in other words we are increasing our cost of rcd by 3 .5 % each year that passes in these 10 years, then this would look similar for part of this formula, but we would show y equals a times 1 plus r raised to the t, where t is our time in years...