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16 February, 00:35

Assume the average vehicle selling price in the United States last year was $36,420. The average price five years earlier was $31,208. What was the annual increase in the selling price over this time period

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  1. 16 February, 03:32
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    3.14%

    Explanation:

    FV = PV (1+r/100) ^n

    FV = $36,420, PV = $31,208, r=? n = 5

    36420 = 31208 * (1+r/100) ^5

    We divide both side by "31,208^5" to make r in (1+r/100) subject of formula

    (36420/31208) ^ (1/5) = (1+r/100)

    (1+r/100) = (36420/31208) ^ (1/5)

    (1+r/100) = 1.0314

    r=1.0314-1

    r=0.0314

    r=3.14%

    The conclusion is that 3.14% is the annual increase in the selling price over this period of 5 years
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