Calculating compounded annual inflation rate

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Chicago_Bull

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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.
 
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