Question

Dawn Swift discovered that twenty years ago, the average tuition for one year at an Ivy League school was $4,500. Today, the average cost is $29,000. What is the growth rate in tuition cost over this 20-year period

Answer 1

Answer: 9.76%

Step-by-step explanation:

The cost today of $29,000 is the future value of the cost 20 years ago with the growth rate in question. It can therefore be solved by the future value formula;

29,000 = 4,500 * ( 1 + r/100)²⁰

( 1 + r/100)²⁰ = 29,000/4,500

1 + r/100 = ²⁰√29,000/4,500

1 + r/100 = 1.0976

r = 9.76%