Precalculus (10th Edition)

Published by Pearson
ISBN 10: 0-32197-907-9
ISBN 13: 978-0-32197-907-0

Chapter 5 - Exponential and Logarithmic Functions - 5.7 Financial Models - 5.7 Assess Your Understanding - Page 322: 58



Work Step by Step

Use the given formula $A=P(1-r)^n$. $P$ is the principal, the amount now, $r$ is the annual inflation rate, $n$ is the number of years, $A$ is the amount $P$ will be worth back after $n$ years: Here $P=\$1000$ $r=0.02=2\%$ $n=3$ years Hence, $A=\$1000(1-0.02)^3=\$941.19.$
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