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There are two different models of the 2013 Mazda2. According to Kelley Blue Book, a new 2013 Mazda MAZDA2 Sport, Manual, 5-Speed has an MSRP of $15,515, a new 2013 Mazda MAZDA Touring, Automatic, 4-Speed has an MSRP of $17,845. The MSRPs of the same models but different years (2012) are $15,325 and $17,655
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What is the cost in 4 years time if the average cost for a new midsized car is about USD 31000 and new car prices tend to go up about 2 percent every year?
If the price increases by 2% each it will be 100 % of the old price + 2 % of the old price = 102 % of the old price each year percent means "out of 100" → 102 % = 102/100 = 102 ÷ 100 = 1.02 Thus to find the price next year, take the price this year and multiply it by 1.02 To find the price after 1 year, multiply the current price by 1.02 giving price after 1 year ≈ current price × 1.02 To find the price after 2 years, multiply the price after 1 year by 1.02, giving: price after 2 years ≈ price after 1 year × 1.02 = current price × 1.02 × 1.02 = current price × 1.02² To find the price after 3 years, multiply the price after 2 years by 1.02, giving: price after 3 years ≈ price after 2 years × 1.02 = current price × 1.02² × 1.02 = current price × 1.02³ From this it can be seen that the price after n years ≈ current price × 1.02ⁿ Thus for the car which starts at $31,000: price after n years ≈ $31,000 × 1.02ⁿ Therefore after 4 years the price will be approx 31,000 × 1.02⁴ ≈ $33,555
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