If the inflation rate is 8% per annum, how much will a $200 item cost after one

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Question: If the inflation rate is 8% per annum, how much will a $200 item cost after one year?

Options:

Correct Answer: $216

Solution:

Cost after one year = 200 + (8/100 * 200) = 200 + 16 = $216

If the inflation rate is 8% per annum, how much will a $200 item cost after one year?

If the inflation rate is 8% per annum, how much will a $200 item cost after one year?

Step 1: Identify the original cost of the item, which is $200.
Step 2: Identify the inflation rate, which is 8%.
Step 3: Convert the inflation rate from a percentage to a decimal by dividing by 100. So, 8% becomes 0.08.
Step 4: Calculate the amount of increase in cost due to inflation by multiplying the original cost by the decimal inflation rate: 200 * 0.08.
Step 5: Perform the multiplication: 200 * 0.08 = 16.
Step 6: Add the increase to the original cost to find the new cost: 200 + 16.
Step 7: Perform the addition: 200 + 16 = 216.
Step 8: The final cost of the item after one year is $216.

Inflation Calculation – Understanding how to calculate the future cost of an item based on a given inflation rate.