Response to the following problem:
In mid-2010 a pound of apples cost $1.38, while oranges cost $1.22. Ten years earlier the price of apples was only $.98 a pound and that of oranges was $.76 a pound.
a. What was the annual compound rate of growth in the price of the two fruits? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Annual Compound rate growth for apples % ,Compound rate growth for oranges % .
b. If the same rates of growth persist in the future, what will be the price of apples in 2030? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of apples in 2030 $
c. What about the price of oranges? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of oranges in 2030 $.
Referencese book & resources eBook: Inflation and the Time Value of Money Worksheet Difficulty
Objective: Understand the difference between real and nominal cash flows and between real and nominal interest rates.