Posted by Gayla on Thursday, January 29, 2009 at 12:15am.
There are two ways of doing this, and they give different answers. The change between 1975 and 1980 is $890 in 5 years, or $178 per year. That is 18.4% of the INITIAL amount per year. But it is not the average annual rate of change during the five year peiod
The best way to compute the annual rate of change, r, for that five year period is to use the formula
(1 +r)^5 = 1856/966 = 1.9213
This leads to
1 + r = 1.1395
r = 13.95 % per year
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