Homework Help Forum: Finance

Posted by Leon on Friday, October 23, 2009 at 9:48pm.

if the price of milk has quadrupled (that is, grown four times) over the past 25 years, what has been the annual rate of inflation in milk price over that time period?

• Finance - Reiny, Friday, October 23, 2009 at 10:10pm

  (1+i)^25 = 4 take the 25th root of both sides 1+i = 4^(1/25) 1+i = 1.0570188 i = .057 or 5.7% check: suppose milk cost $0.50 25 years ago now it would cost .5(1.0570188)^25 = 2.0 which is four times what it was 25 years ago

  
  

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