Question

If 1 US dollar in 1860 had the same purchasing power as $28.95 in 2018, what is the yearly average inflation rate during that time?

A. 2.15%

B. 2.75%

C. 3.15%

D. 3.75%

Answer 1

Explanation:

From 1860 to 2018 is 158 years

Use compounding formula

$ 28.95 = $ 1 ( 1 +i) ^158 where i is decimal inflation rate %

`\sqrt[158]{28.95}` = 1 + i

i = .0215 = 2.15 %