i need help with a precalc question!?

A gallon of milk cost $1.99 two years age. Now it costs $2.19. To the nearest percent, what has been the annual rate of increase in the cost? the answer is 5%, but how do you get it, which formula do i use?

1 Answer

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  • 9 years ago
    Best Answer

    Let x be the interest per year.

    (1.99)((100 + x) / 100)((100 + x) / 100) = 2.19

    ((100 + x) / 100)^2 = 219 / 199

    (100 + x) / 100 = sqrt ((219) / 199)

    100 + x = (100) sqrt ((219) / 199)

    x = (100) sqrt ((219) / 199) - 100

    x = 4.904838428111316 %

    Note that ((100 + x) / 100) is the proportion of increase.

    Note that I am using compound interest as well.

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