How much money will ne spent at restaurants in 2015?

Question

Money spent at a restaurant increased at a rate of 4% each year. 

In 2005, about $500 billion was spent at restaurants.

If the trend continues, how much will be spent at restaurants in 2015?

Answer 1

Hello Madeline,

 

This is an exponential growth problem.

 

The growth rate is 4% (0.04).

The time is 10 years (10 years from 2005 to 2015)

 

A = P(1+i)^t

A = amount spent in 2015

P = amount spent in 2005

i = interest rate expressed as a decimal

t = # years

 

A = 500(1.04)¹⁰

A = 500(1.480244)

A = 740.122 ==> 740 billion