In 1966,the average tuition for one year in the MBA program at the University of Chicago was $3,600.Thirty years later,in 1996,the average tuition was $27,400.What is the compound annual growth rate in tuition (rounded to the nearest whole percentage)over the 30-year period?
A)6%
B)7%
C)8%
D)10%

Question

Quizplus · Accepted Answer

The compound annual growth rate can be calculated using the formula:CAGR = (Ending Value / Beginning Value)^(1/n) - 1where:CAGR is the compound annual growth rateEnding Value is the value at the end of the periodBeginning Value is the value at the beginning of the periodn is the number of yearsIn this case, the ending value is $27,400, the beginning value is $3,600, and the number of years is 30. Plugging these values into the formula, we get:CAGR = (27,400 / 3,600)^(1/30) - 1= 0.0794= 7.94%Rounding to the nearest whole percentage, the compound annual growth rate is 8%.

In 1966,the Average Tuition for One Year in the MBA