The housing price index for the United States in 1990 was 144.8, while its value in 1999 was 192.9 (the index is calculated such that it averaged 100 in the 1982-1984 period). What was the average annual continuously compounded inflation rate for housing costs between 1990 and 1999?
I am a beginner and my mother language is not english so I find it hard to understand the question. Could anyone help me ? and give me some hint ?
Dec 16th 2010, 02:56 AM
If the price in year t= 0 is A and the inflation rate is r, compounded annually for t= n years gives a price . You need to solve for r.