Abicycle tire company performed a web-based study of a popular tire retail price over time. the study indicated that price is set at $16.00 per tire, it was expected to increase to $19.00 over the next 5 years

a. determine the annual rate of inflation over 5 years to increase the price from $16.00 to $19.00.

b. determine the market interest rate that must be used in economic equivalence computations if inflation is considered and an 8% per year real interest rate is expected by this company.

(a) inflation rate will be 0.0349

(B) Nominal interest will be 8.0349 %

Explanation:

We have given final price of the bicycle F=$19

Initial price of the bicycle P=$16

(a) Time is given t = 5 years

We know that , here i is inflation rate

So inflation rate will be 0.0349

(b) We have given real interest = 8 %

We know that nominal interest rate = real interest rate + inflation rate = 8+0.0349 = 8.0349 %

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"