Answer
| Year | Anuual Living Expnses |
| 1 | 44440 |
| 2 | 44880 |
| 3 | 45320 |
Working notes for the above answer is as under
we have been provided with the information that,
A family spends $44000 a year for living expenses So current living expanses is $ 44,000
and it was given that, prices increase 1% for a year
and for the next three years the amount needed for living expanses are as follow
If we see in the chart the price increase @1% for 3 years are as follow
year 1 = 1.010
year 2 = 1.020
year 3 = 1.030
Now let us calculate the price increases
| Year | Annual Living Expanses without Increase Effect |
Price Increase@1% Factor |
Annual Living Expanses with Increase Effect |
| 0 | 44000 | 1 | 44000 |
| 1 | 44000 | 1.01 | 44440 |
| 2 | 44000 | 1.02 | 44880 |
| 3 | 44000 | 1.03 | 45320 |
