Between 2005 and 2010

,

the average rate of inflation was about 4.7

%

per year. If a cart of groceries cost $130

in 2005, what did it cost in 2010

?

A cart of groceries cost approximately $nothing

in 2010

.

(Round to two decimal places as needed.)

A cart of groceries that costed US$ 130 in 2005, costs US$ 163.56 in 2010 at an average rate of 4.7% of inflation.

Step-by-step explanation:

1. Let's review the data given to us for solving the question:

Cost of cart of groceries in 2005 = US$ 130

Period of inflation analysis = 5 years

Inflation average rate = 4.7 % compounded annually

2. Let's find the future value of the cost of a cart of groceries in 2010, using the following formula:

FV = PV * (1 + i) ⁿ

PV = Cost of cart of groceries in 2005 = US$ 130

number of periods (n) = 5 (Period of inflation analysis = 5 years)

Inflation average rate (i) = 4.7% = 0.047

Replacing with the real values, we have:

FV = 130 * (1 + 0.047) ⁵

FV = 130 * (1.047) ⁵

FV = 130 * 1.258152858

FV = 163.56 (Rounding to two decimal places)