The rate of increase of the price of sugar is observed to be two percent more than the inflation rate expressed in percentage. The price of sugar, on January 1, 1994 is Rs. 20 per kg. The inflation rates of the years 1994 and 1995 are expected to be` 8%` each. The expected price of sugar on January 1, 1996 would be :

Answer

To find the expected price of sugar on January 1, 1996, we will follow these steps:

### Step 1: Understand the problem
The price of sugar on January 1, 1994, is Rs. 20 per kg. The inflation rate for the years 1994 and 1995 is expected to be 8% each. The price of sugar increases at a rate that is 2% more than the inflation rate.

### Step 2: Calculate the rate of increase of the price of sugar
The inflation rate is 8%. Therefore, the rate of increase of the price of sugar will be:
\[ \text{Rate of increase of sugar price} = \text{Inflation rate} + 2\% \]
\[ = 8\% + 2\% = 10\% \]

### Step 3: Calculate the price of sugar on January 1, 1995
To find the price of sugar on January 1, 1995, we need to apply the 10% increase to the price on January 1, 1994.
\[ \text{Price on January 1, 1995} = \text{Price on January 1, 1994} \times (1 + \text{Rate of increase}) \]
\[ = 20 \times (1 + 0.10) = 20 \times 1.10 = 22 \text{ Rs.} \]

### Step 4: Calculate the price of sugar on January 1, 1996
Now, we will apply the same 10% increase to the price on January 1, 1995 to find the price on January 1, 1996.
\[ \text{Price on January 1, 1996} = \text{Price on January 1, 1995} \times (1 + \text{Rate of increase}) \]
\[ = 22 \times (1 + 0.10) = 22 \times 1.10 = 24.2 \text{ Rs.} \]

### Final Answer
The expected price of sugar on January 1, 1996, would be Rs. 24.2 per kg.

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