Find the current price of the item and the price 10 years from today. Round your answers to the nearest dollar as necessary.

Question

If the rate of inflation is 3.9% per year, the future price p(t) (in dollars) of a certain item can be modeled by the following exponential function, where t is the number of years from today. 

P(t)=1200(1.039)^t

Answer 1

The current price would be when t=0, because it is 0 years from today. So you plug in t=0 into P(t) to get:

 

P(0) = 1200(1.039)^0 = 1200. So the current price is $1200

 

For the price 10 years from today, you have to use t=10, since again, t is the number of years from today. 

 

P(10) = 1200(1.039)^10 = 1759.29. So the price 10 years from today is $1759.29