1) Suppose that your annual salary today is $52,000 and increases at the same ra
ID: 3036396 • Letter: 1
Question
1) Suppose that your annual salary today is $52,000 and increases at the same rate as inflation [continuous compounding]. If inflation continues at an annual rate of 6%, how long will it be before $52,000 increases to an annual salary of a million dollars? 2) Suppose that a gallon of milk costs $4 today and that a dozen eggs costs $1.50. Assume that the price of milk increases at a rate of 2% each year and that the price of eggs increases at a rate of 3% each year. If the inflation rates of these items do not change, how much will each of these items cost in 10, 20, 30, 40, and 50 years? 3) Create a chart and graph to show the change in price over time. [You could use Excel.] What if the price of a dozen eggs increases at an annual rate of 6%? What is your observation? 1) Suppose that your annual salary today is $52,000 and increases at the same rate as inflation [continuous compounding]. If inflation continues at an annual rate of 6%, how long will it be before $52,000 increases to an annual salary of a million dollars? 2) Suppose that a gallon of milk costs $4 today and that a dozen eggs costs $1.50. Assume that the price of milk increases at a rate of 2% each year and that the price of eggs increases at a rate of 3% each year. If the inflation rates of these items do not change, how much will each of these items cost in 10, 20, 30, 40, and 50 years? 3) Create a chart and graph to show the change in price over time. [You could use Excel.] What if the price of a dozen eggs increases at an annual rate of 6%? What is your observation? 1) Suppose that your annual salary today is $52,000 and increases at the same rate as inflation [continuous compounding]. If inflation continues at an annual rate of 6%, how long will it be before $52,000 increases to an annual salary of a million dollars? 2) Suppose that a gallon of milk costs $4 today and that a dozen eggs costs $1.50. Assume that the price of milk increases at a rate of 2% each year and that the price of eggs increases at a rate of 3% each year. If the inflation rates of these items do not change, how much will each of these items cost in 10, 20, 30, 40, and 50 years? 3) Create a chart and graph to show the change in price over time. [You could use Excel.] What if the price of a dozen eggs increases at an annual rate of 6%? What is your observation?Explanation / Answer
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Dear Student Thank you for using Chegg !! Annual salary Today (P) = 52000 $ Rate Of Inflation 'r = 6% Final Amount = 1000000 $ Amount = P (1 + r/100 )^n 1000000 = 52000(1.06)^n 19.23076923 = 1.06^n Taking natural log both sides ln (19.23) = n * ln(1.06) 2.95651156 = n * ln(1.06) n = 50.73909321 yearsRelated Questions
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