On January 1, 1999, the price of gasoline was $1.39 per gallon. If the price of gasoline increased by 0.5% per month, what was the cost of one gallon of gasoline, to the nearest cent, on January 1 one year later?
Answer (3)
$1.40 ;
P ( t ) = 1.39. ( 1.005 ) t w h ere t i s t im e in m o n t h s P ( 1 ) = 1.39. ( 1.005 ) 1 P ( 1 ) = 1.39 ∗ 1.005 P ( 1 ) = $ 1.40
The cost of one gallon of gasoline on January 1, 2000, after a monthly increase of 0.5% for 12 months, was approximately $1.48. This was calculated using the compound interest formula. The initial price was $1.39, and compounded growth was applied for one year.
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