SOLUTION: Ten years ago, an item cost $2,500. The rate of inflation for the first 4 years was 4%, during the next 3 years 6% and for the last 3 years 9%. Assuming that the increase in price

Question 1172776: Ten years ago, an item cost $2,500. The rate of inflation for the first 4 years was 4%, during the next 3 years 6% and for the last 3 years 9%. Assuming that the increase in price were due to the inflation alone, what is the average inflation rate during 10 years?

Answer by ikleyn(52787) (Show Source): You can put this solution on YOUR website!
.


The average multiplicative inflation factor during 10 years under given condition is


     = 1.060799.


It means that the nominal inflation rate is  1.060799 - 1 = 0.060799,  or  6% (rounded).    ANSWER

Solved.

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Notice that to answer the question, the initial/original price of the item DOES NOT matter.

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On inflation, see numerous solved problems in the lesson
- Inflation and Salary problems
in this site.

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