The rate of inflation is 3%. The cost of an item in future years can be found by iterating the function c(x)=1.03x. Find the cost of a $1500 refrigerator in three years if the rate of inflation remains constant.
kn kj
To find the cost of a $1500 refrigerator in three years with a constant inflation rate of 3%, we can use the function c(x)=1.03x, where x represents the current cost of the refrigerator.
We start with the cost of the refrigerator, which is $1500. Let's plug this value into the function:
c(x)=1.03x
c($1500) = 1.03 * $1500 = $1545
After one year, the cost of the refrigerator would increase by 3% to $1545. Now, let's plug this new value into the function to calculate the cost after the second year:
c($1545) = 1.03 * $1545 = $1591.35
After two years, the cost of the refrigerator would increase again by 3% to $1591.35. Now, let's plug this value into the function to calculate the cost after the third year:
c($1591.35) = 1.03 * $1591.35 = $1638.40
Therefore, the cost of a $1500 refrigerator in three years, assuming a constant inflation rate of 3%, would be approximately $1638.40.
1500 * 1.03 * 1.03 * 1.03 = 1500 * 1.03^3
Google compound interest.