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Assume that 28 years ago, the average tuition for one year in the MBA program at...

Assume that 28 years ago, the average tuition for one year in the MBA program at a university was $3.4 thousand and now it is $36.8 thousand for one year. What is the compound annual growth rate in tuition over this period? Round to the nearest 0.01% (e.g., if your answer is 6.832%, record it as 6.83)

Solutions

Expert Solution

We use the formula:  
A=P(1+r/100)^n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

36800=3400*(1+r/100)^28

(36800/3400)^(1/28)=(1+r/100)

(1+r/100)=1.0888

r=1.0888-1

=8.88%(Approx)

jeff jeffy answered 2 years ago
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