At the start of 1991, undergraduate students paid $190 per college course. By the end of 2010, the price per course had increased to $565. Determine the annual rate of increase.
A) 4.8%
B) 5.1%
C) 5.6%
D) 6.6%
E) 7.2%

Question

Quizplus · Accepted Answer

The annual rate of increase can be calculated using the formula:r = (FV / PV)^(1/n) - 1where:r is the annual rate of increaseFV is the future valuePV is the present valuen is the number of yearsIn this case, the present value is $190, the future value is $565, and the number of years is 20. Plugging these values into the formula, we get:r = (565 / 190)^(1/20) - 1= 0.056= 5.6%Therefore, the annual rate of increase is 5.6%.

At the Start of 1991, Undergraduate Students Paid $190 Per