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Home > A2C > Chapter 7 > Lesson 7.1.1 > Problem 7-15

7-15.

The cost of food has been increasing by 4% per year for many years. To find the cost of an item 15 years ago, Heather said, “Take the current price and divide it by (1.04)15.” Her friend Elissa said, “No, you should take the current price and multiply it by (0.96)15 !
Explain who is correct and why. Homework Help ✎

Since the situation describes an increase, the multiplier must be 1.04. In this situation, x will represent cost.
What will x be 15 years in the past?

Heather is correct, because a 4% decrease does not cancel out a 4% increase.