The discussion revolves around calculating the future cost of gasoline considering an annual inflation rate of 2.5%. The original poster presents a scenario from 2009 where the cost of gasoline is $0.90 per litre, and they seek to determine the price of filling a 60-litre gas tank ten years later.
Some participants have provided initial calculations and questioned the assumptions regarding the inflation application. There is an ongoing exploration of the correct interpretation of the formula and its variables, with no clear consensus yet on the final approach.
Participants are considering the implications of compounding inflation on the price of gasoline, and there is a focus on ensuring the correct initial value is used in calculations. The discussion reflects the need for clarity on how inflation affects prices over multiple years.
= 1.125.ohhnana said:Homework Statement
Inflation is currently causing the cost of items to increase by about 2.5% per year. In 2009 a litre of gasoline costs approximately $0.90. What will it cost to fill a 60 litre gas tank 10 years from now? Round your answer to the nearest dollar.
Homework Equations
A=A0(1+i)^n
The Attempt at a Solution
C=.90+.025*10(.90)