Provide an appropriate response.
-Inflation is causing prices to rise at a rate of 6% per year. Use the exact double time formula to determine what the price will be in 4 years if the item costs $100 today.
A)$100.24
B)$126.25
C)$100.28
D)$100.06

Question

Quizplus · Accepted Answer

The exact double time formula isn't directly applicable here, but the general formula for future value in the context of inflation is $FV = PV(1 + r)^n$, where $PV$ is the present value, $r$ is the annual rate (expressed as a decimal), and $n$ is the number of years. For a $100 item with a 6% inflation rate over 4 years, the calculation is $100(1 + 0.06)^4 = 100(1.2625) = $126.25$.

Provide an Appropriate Response