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If inflation is at 5% and a product costs $100, what will be the cost of the pro

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Question: If inflation is at 5% and a product costs $100, what will be the cost of the product after one year?

Options:

  1. $105
  2. $110
  3. $115
  4. $120

Correct Answer: $105

Solution: 

Cost after one year = Original cost * (1 + Inflation rate) = 100 * 1.05 = $105

If inflation is at 5% and a product costs $100, what will be the cost of the pro

Practice Questions

Q1
If inflation is at 5% and a product costs $100, what will be the cost of the product after one year?
  1. $105
  2. $110
  3. $115
  4. $120

Questions & Step-by-Step Solutions

If inflation is at 5% and a product costs $100, what will be the cost of the product after one year?
  • Step 1: Identify the original cost of the product, which is $100.
  • Step 2: Identify the inflation rate, which is 5%.
  • Step 3: Convert the inflation rate from a percentage to a decimal by dividing by 100. So, 5% becomes 0.05.
  • Step 4: Add 1 to the decimal inflation rate. This gives you 1 + 0.05 = 1.05.
  • Step 5: Multiply the original cost by the result from Step 4. So, $100 * 1.05 = $105.
  • Step 6: The cost of the product after one year will be $105.
  • Inflation Calculation – Understanding how to adjust prices based on a given inflation rate.
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