Quantitative Literacy Practice Exam 2025 – Comprehensive Preparation Guide

Question: 1 / 400

If the price of a loaf of bread increases at a rate of 1.5% per year, what will the cost be in 2025 if it is $2.75 in 2018?

$3.05

To determine the future cost of a loaf of bread with a yearly price increase, you apply the formula for compound interest, which is also applicable for price increases:

\[ \text{Future Value} = \text{Present Value} \times (1 + r)^n \]

In this case, the present value is $2.75 (the cost in 2018), \( r \) is the increase rate (1.5% or 0.015), and \( n \) is the number of years from 2018 to 2025, which is 7 years.

Plugging in the numbers:

\[ \text{Future Value} = 2.75 \times (1 + 0.015)^7 \]

Calculating \( (1 + 0.015)^7 \):

1. Add 1 to the rate: \( 1 + 0.015 = 1.015 \).

2. Raise this to the 7th power: \( 1.015^7 \approx 1.1136 \).

Now multiply this by the original price:

\[ \text{Future Value} \approx 2.75 \times 1.1136 \approx 3.06

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$2.95

$3.50

$3.15

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