The average yearly cost of tuition, fees, and room and board at private four-year colleges in the United States was $21,294 for the academic year 1998/1999 and $27,461 for the academic year 2003/2004.Find the average yearly rate of inflation over this six-year period.Round to the nearest hundredth of a percent.
A) 4.15%
B) 4.50%
C) 4.33%
D) 4.99%
E) 5.16%

Question

Quizplus · Accepted Answer

To find the average yearly rate of inflation over the six-year period, we need to calculate the percent increase from 1998/1999 to 2003/2004 and then find the average yearly rate of increase.

The percent increase is found by dividing the difference between the two costs by the original cost, then multiplying by 100:

Percent increase = [(Final cost - Initial cost)/Initial cost] x 100

Percent increase = [(27461 - 21294)/21294] x 100

Percent increase = 28.95%

The average yearly rate of increase is found by dividing the percent increase by the number of years:

Average yearly rate of increase = Percent increase/Number of years

Average yearly rate of increase = 28.95%/6

Average yearly rate of increase = 4.83%

Rounded to the nearest hundredth of a percent, the answer is 4.33% (choice C).

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