Dawn Swift discovered that 20 years ago, the average tuition for one year at an Ivy League school was $15,000. Today, the average cost is $60,000. What is the growth rate in tuition cost over this 20-year period?
A) 15.5%
B) 4.2%
C) 7.18%
D) 10.6%

Question

Quizplus · Accepted Answer

To calculate the growth rate, we can use the compound annual growth rate (CAGR) formula. 
CAGR = (Ending value / Beginning value)^(1/number of years) - 1 
Using the given values, we get: 
CAGR = (60,000 / 15,000)^(1/20) - 1 
CAGR = 1.0718 - 1 
CAGR = 0.0718 or 7.18% 
Therefore, the growth rate in tuition cost over this 20-year period is 7.18%, which corresponds to choice C.

Dawn Swift Discovered That 20 Years Ago, the Average Tuition