Today a typical family of four spends $600/month for food. If inflation occurs at the rate of 3%/year over the next 7 yr, how much should the typical family of four expect to spend for food 7 yr from now? Please round the answer to the nearest cent.

Question

Today a typical family of four spends $600/month for food. If inflation occurs at the rate of 3%/year over the next 7 yr, how much should the typical family of four expect to spend for food 7 yr from now? Please round the answer to the nearest cent. ​

Quizplus · Accepted Answer

To find the future cost of food, we need to use the formula:

Future cost = Present cost x (1 + inflation rate)^number of years

Substituting the given values:

Future cost = $600 x (1 + 0.03)^7
Future cost = $600 x 1.2250435
Future cost = $735.0261

Rounding to the nearest cent, the answer is D) $737.92.

Today a Typical Family of Four Spends $600/month for Food