Question

The per-employee cost of insurance rose by 13% between 2015 and 2016. It then dropped by 2% between 2016 and 2017. It then increased by 17% between 2017 and 2018. By what percentage did the cost of insurance change between 2015 and 2018? (NOTE: The answer is NOT 28%!)

Answer 1

The cost of insurance change 29,6% between 2015 and 2018.

Explanation:

We can start by defining C as the cost of insurance in 2015.

Then, we know it rose 13% between 2015 and 2016:

`C_(16)=(1+0.13)*C=1.13C`

It then dropped by 2% between 2016 and 2017:

`C_(17)=(1-0.02)*C_(16)=0.98*(1.13C)=1.1074C`

And then it increases by 17% between 2017 and 2018:

`C_(18)=1.17C_(17)=1.17*1.1074C=1.295658C`

We can conclude the cost of insurance change 29,6% between 2015 and 2018.