Question

If prices increase at a monthly rate of 1.9% by what percentage do they increase in a year

Answer 1

Let the initial price be 100. Price after 1 month is 101.9. common ratio is r = 101.9/100 = 1.019

After 12 months, the price will be:

A1 x r ^n-1

= 101.9 * (1.019)^12-1

= 101.9 * 1.019^11= 125.34

So the yearly increase would be: 125.34 – 100 = 25.34

Therefore, the yearly price rise percentage is 25.34/100 x 100 = 25.34%