The price of milk has been steadily increasing 5% per year. If the cost of a gallon is now $3.89: What will it cost in 10 years? What did it cost 5 years ago?

This is the concept of exponential growth; The rate of growth of the price milk is 0.05, current price=$ 3.89;

this information can be modeled by the exponential growth equation given by:

y=ae^ (nr)

where;

a=initial value

r=rate of growth;

n=number of years

thus the function modeling our information will be:

y=3.89e^0.05n

the price after 10 years will be:

y=3.89e^ (0.05*10)

y=3.89*1.649

y=6.41

the price after 10 years will be $ 6.41

The price 5 years ago will be:

y=3.89*e^ (-5*0.05)

y=3.89 e^ (-0.25)

y=3.03

thus we conclude that the price 5 years ago was $ 3.03