00:01
For this type of problem with inflation, to me, when you see growth like this, you have your initial amount and then 1 plus r to the t power.
00:15
Where in this problem, so let me just write it a of t, and the initial value changes each time, but it be 1 .02, because there's two things, is the increase with inflation is that plus, and then the rate of 2 % you want to change to 0 .02 and 1 plus 0 .02 would be that.
00:37
So in part a they want the amount after 5 years of this gallon of milk that costs 395 and then 1 .02 to the fifth power.
00:52
I would just use a calculator and type that in and i get an answer of 436 rounded to the nearest penny.
01:03
So then in letter b, this is very similar, except it's asking you when.
01:11
So you're going to set it up where the ending balance is 1350 and the beginning balance was 11.
01:21
It's still 1 .02, but now you have to solve for t.
01:26
So there's two things you need to do.
01:28
The first is to divide that 11 over.
01:32
And then what you can do is actually any log that you want.
01:36
I like to do natural log because when you do that natural log, you can move this exponent in front...