Answer:
What is the annual rate of inflation?
What will be the price of this car in seven years?
Explanation:
using the rule of 72 we can calculate the annual inflation rate:
72/11 = r = 6.5%
the rule of 72 can be used to determine the total number of years it takes a economy (or other variable) to double its size given a certain growth rate (or interest rate).
to determine the price of the car in 7 years, we can use the future value formula:
future value = present value x (1 + r)ⁿ
future value = $28,000 x 1.065⁷ = $43,511.62
The annual rate of inflation is 6.5% and the price of the car in seven years will be $43,511.62.
It should be noted that the rule of 72 can be used to calculate the rate of return. This will be
Rate = 72/11
Rate = 6.5%
Therefore, the price of the car in 7 years will be:
= present value x (1 + r)ⁿ
where
present value = $28,000
r = 6.5%
n = 7
Therefore, the future value will be:
= $28,000 x 1.065⁷
= $43,511.62
Read related link on:
https://brainly.com/question/15311689
