Mathematics Unit 4 Db, Math Problem Example

The most recent annual inflation of Kenya is approximately 3.9 %( the last update by Otieno 2010). The currency in Kenya is Kenyan Shillings. Taking a little of petrol to be KSh80, the price would decrease after years.

Using S= C (1+r/100) ^5 and taking C= KSh80 and r = 3.9%, the price after five years or any given duration can be calculated.

The price (after five years) will be, S= 80(1+3.9/100) ^5

S = 80(1.039) ^5

S = 80*1.170572956

S = 96.87

Suppose the price of one litre of petrol in Kenya is KSh80 in 2010, we expect that after 5 years (2015) the price would have risen to KSh93.65. After inflation, the apparent value of money decreases hence the values of items seem to rise.

Reference

Otieno, J. (2010). Inflation rates. Kenya’s Annual Inflation Rate. Retrieved on 20^th, June, 2010 from  http://www.bloomberg.com/apps/news?sid=az_pYtAhWM9g&pid=20601087

Xola, P. (2009). Inflation rates. Kenya’s economy. Macmillan publishers.