a.) In 2013, selected automobiles had an average cost of $16,000. The average cost of those same automobiles is now $20,480.

What was the rate of increase for these automobiles between the two time periods? (Round your answer to the nearest whole percent.)

b.) A family spends $58,000 a year for living expenses. If prices increase 2 percent a year for the next three years, what amount will the family need for their annual living expenses after three years? Only use the FV factor values obtained in Exhibit 1-A to calculate this solution. (Round your FV factor to 3 decimal places and final answer to the nearest whole dollar.)