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(a) 29.12 (actual)
first year rate of paper (inflation rate) : 25 + 25 *
6.5/100 = 26.625
paper rate in first year is 1.5 % more . ..thr4
inflated cost in 1 yr = 26.625 + 1.5 / 100 * 26.625 =
27.024.
second year : 27.024 + 27.024 * 6.5 / 100 = 28.78
paper cost : 1.5 /100 * 28.78 + 28.78 = 29.12 ( approx..)