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Question

Suppose the annual rate of inflation is expected to be 4% for the next 5 years. Then the cost C of goods or services t years from now can be approximated by C(t) = P(1.04)^t, 0 ≤ t ≤ 5, where P is the present cost. Estimate the yearly cost of tuition four years from now for a college where the tuition is currently $22,000 per year. (Round your answer to the nearest dollar.)

Answer 1

Use the equation

C(t) = P (1.04)^t,

with

P = 22,000

t = 4

and evaluate C(t).