The average yearly cost of tuition, fees, and room and board at private four-year colleges in the United States was $20,805 for the academic year 1998/1999 and $24,817 for the academic year 2002/2003. Find the average yearly rate of inflation over this five-year period. Round to the nearest hundredth of a percent.
A)3.47%
B)3.77%
C)3.59%
D)3.68%
E)4.03%

Question

Quizplus · Accepted Answer

The average yearly rate of inflation can be calculated using the formula for compound annual growth rate (CAGR): CAGR = [(Ending Value/Beginning Value)^(1/Number of Years)] - 1. Plugging in the values: CAGR = [(24817/20805)^(1/5)] - 1 = 0.0359 or 3.59%.

The Average Yearly Cost of Tuition, Fees, and Room and Board