When the value of an item such as a house or investment increases, we say it appreciates in value. You may have noticed that the prices of everyday goods and services also increase over time due to inflation.
Problem 1 :
The inflation rate over the next three years is predicted to be 2% then 3% then 3.5%. What will be the cost in three years time of an item which currently costs $140 if the cost rises in line with inflation?
Solution:
Cost in 3 years = $152.23
Problem 2 :
What would you expect a bicycle costing $500 today to cost in four years time, if the inflation rate is predicted to be 3%, 3.5%, 4% and then 5% over the four years?
Solution:
Cost in 4 years = $582
Problem 3 :
If the rate of inflation is expected to remain constant at 4% per year for the next 5 years, what would you expect a $20000 car to cost in 5 years time?
Solution:
Cost in 5 years = $24333
Problem 4 :
An investment of $18250 is left to accumulate interest over a 4 year period. During the first year the interest paid was 9.2%, and in successive years the rates paid were 8.6%, 7.5% and 5.6%. Find the value of the investment after 4 years.
Solution:
Given, P = $18250, T = 4 years
r = 9.2% for first year and
r = 8.6% for second years and
r = 7.5% for third years and
r = 5.6% for fourth years.
Problem 5 :
An amount of money is invested at 8% for the first year, 11% for the second year and 7% for the third year. What is the percentage increase in the value of the investment over this period?
Solution:
= 28.3 % increase
Problem 6 :
A politician's wage increases by 3%, 8%, 5% and then 10% over a four year period. What is the percentage increase in the wage over this period of time?
Solution:
= 28.5 % increase
Problem 7 :
A share fund reported a 9% increase in value for year 1, a 13% decrease in value for year 2 and a 4% increase in value for year 3. What was the overall percentage increase or decrease of the share fund over the 3 years?
Solution:
May 21, 24 08:51 PM
May 21, 24 08:51 AM
May 20, 24 10:45 PM