Hi everyone, How do you use the calculater to work out the COMPOUNDED ANNUAL INFLATION rate? Price level Year 2000 = 174 Price level Year 2004 = 190.3 Price level Year 2005 = 196.8 And we want to know the inflation rate for year 2000-2005 Thank you!!!
[(196.8/174) ^ 1/6] - 1 = 2.07% Do you need a financial calculator for this?
thanks for that but shouldn’t it be for 5 periods instead of 6? i.e ^1/5
To count number of years always do it like this: (end year - beginning year) + 1, so (2005-2000) + 1 = 6. How many numbers between 17 and 29 inclusive? 13.
my reason for 5 is because we were only given price level for from year 2000. THerefor, we would not be able to calculate the inflation rate for year 2000. Correct me if i am wrong. thanks again
I just came back after catching my mistake! Yes, here I guess you have to be careful and count up the number of years correctly. (end year - beginning year) In some other cases, you need to know the number of years, and then you would use (end year - beginning year) + 1. Thanks.
cool!