Assuming That the Rate of Inflation Is 4% Per Year

Multiple Choice

Assuming that the rate of inflation is 4% per year, the equation P = P _o (1.04) ^t yields the predicted price P , in t years, of an item that presently costs P _o. Find the predicted price of a $0.95 soft drink in 9 years. The choices are rounded to the nearest cent.

A) $0.68
B) $1.35
C) $1.78
D) $2.20