What I know:
P=35,R=5.1%,T=7 (but 7 years ago) m I assume is 1
A= 35(1+0.051/1) ^1*-7
A basket of May flowers at Betty's Blooms cost $35 today. Assuming that inflation has been running at 5.1% per year for the past several years, how much did a comparable basket of flowers cost 7 years ago?
When dealing with a value of the past (7 years ago) does this value become negative?
2 answers
Let the cost 7 years ago be x , then
x(1.051)^7 = 35
x = 35/(1.051)^7 =
or
amount 7 years ago = 35(1.051)^-7
you MUST get the same answer.
x(1.051)^7 = 35
x = 35/(1.051)^7 =
or
amount 7 years ago = 35(1.051)^-7
you MUST get the same answer.