Question 1131681
255,600 in 1990
677,300 in 2004


formula used is f = p * (1 + r) ^ n


f is the future value
p is the present value
r is the interest rate per year.
n is the number of years.


interest rate per year is he annual inflation rate in this problem.


formula becomes:


677300 = 255600 * (1 + r) ^ 14


divide both sides of this equation by 255600 to get:


677300 / 255600 = (1 + r) ^ 14


take the 14th root of each side of this equation to get:


(677300 / 255600) ^ (1/14) = 1 + r


subtract 1 from both sides of this equation to get:


(677300 / 255600) ^ (1/14) - 1 = r


solve for r to get r = .0720869662


convert to percent by multiplying by 100 to get average annual inflation rate percent = 7.20869662 percent.


if they want the answer as inflation rate and not percent, then the answer is .07 rounded to 2 decimal places.


if they want the answer as inflation rate percent, then the answer is 7.21% rounded to 2 decimal places.