In 1930,the highest paid player in major league baseball was Babe Ruth of the New York Yankees,with an annual salary of $80,000.In 2017,the highest paid player in major league baseball was Clayton Kershaw of the Los Angeles Dodgers with a salary of $35,571,000.What was the average annual rate of growth in the top baseball salary over this time period?
A)7.26%
B)7.96%
C)9.23%
D)10.41%

Question

Quizplus · Accepted Answer

The average annual rate of growth can be calculated using the formula for compound annual growth rate (CAGR): CAGR = (Ending Value/Beginning Value)^(1/Number of Years) - 1. Plugging in the values: CAGR = ($35,571,000/$80,000)^(1/87) - 1, which results in approximately 7.26%.

In 1930,the Highest Paid Player in Major League Baseball Was