Question
ME Graw Hil IIIIIIIII 6 of 50 Concepts completed (i) Fill in the Blank Question Tom needs a new washing machine. A new one costs \( \$ 400 \). He decides to save and buy one next year. All other factors being equal, if inflation is \( 4 \% \), the weshing machine will cost \$ \( \square \) next year. This should be an even answer with no need for decimals.
Ask by Higgins Chan. in the United States
Jan 22,2025
Real Tutor Solution
Tutor-Verified Answer
Answer
The washing machine will cost \$416 next year.
Solution
To calculate the cost of the washing machine next year with a 4% inflation rate:
1. **Current Price:** \$400
2. **Inflation Rate:** 4% of \$400 = \$16
3. **Next Year's Price:** \$400 + \$16 = **\$416**
**Answer:** \$416
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Simplify this solution Mind Expander
To calculate the future cost of the washing machine, you can apply the formula for inflation: Future Cost = Present Cost × (1 + Inflation Rate). In this case, that's \( 400 \times (1 + 0.04) = 400 \times 1.04 \). This results in a cost of \( 416 \), so the washing machine will cost \$ \( 416 \) next year. Now, if Tom had decided to purchase the washing machine now instead of waiting, he might miss out on potential interest accumulations or cash back offers available during promotions, which can often offset the impacts of inflation. Proactive budgeting can make a difference!
