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# Calculate the annual inflation rate

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Thirty years ago, the price of a new Volkswagen was \$5,000. (Actual price adjusted to simplify the calculation). The price of a new Volkswagen is \$20,000 today. Basing your answer solely on the aforementioned prices, by what percent have prices increased over the past thirty years? (Show your work). What average annual inflation rate would have resulted in this answer?

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#### Solution Preview

New Price=N=\$20000
Old price=O=\$5000

Percent change in ...

#### Solution Summary

Solution describes the steps to calculate the net increase the price of Volkswagen in the last 30 years. It also calculates the annual inflation rate that would have resulted in the same price.

\$2.49