The price of fuel has tripled over the past ﬁfteen years. Determine the rate of growth over this time period.

Question

Quizplus · Accepted Answer

The rate of growth can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/n) - 1. Here, Ending Value/Beginning Value = 3 (since the price tripled), and n = 15 years. Plugging in the values, CAGR = (3)^(1/15) - 1 ≈ 0.076 or 7.6%.

The Price of Fuel Has Tripled Over the Past ﬁFteen