Problem $2$

You want to purchase a new car $5$ years from today. The car you wish to purchase costs $$30,000$ today, and your research indicates that its

price will increase by $2\%$ to $4\%$ per year over the next $5$ years.

a$.$ Estimate the price of the car in $5$ years if inflation is $(1)2\%$ per year and $(2)4\%$ per year.

b$.$ How much more expensive will the car be if the rate of inflation is $4\%$ rather than $2\%?$

c$.$ Estimate the price of the car if inflation is $2\%$ for the next $2$ years and $4\%$ for $3$ years after that.

Answers $($insert your answers in the highlighted cells; use cell references, equations, and functions wherever possible$)$

a$.$

Cost today

Inflation rate

Number of years

Future value

b$.$ Difference

c$.$

Cost today

Inflation rate

Number of years

Future value in $2$ years

Cost in $2$ years

Inflation rate

Number of years

Future value in $5$ years

$4\%$ inflation