1.) Prices climb at a constant 3% annual rate. a. By what percent will prices have climbed after 5 years?
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Since the prices are climbing at 3% per year, then the prices are following exponential growth.
The exponential growth formula is `A=A_0(1+r)^t` where A is the final amount, `A_0` is the initial amount, r is the growth rate and t is time in years.
This means that after 5 years,
This means that after 5 years, the prices have climbed by 15.9%.