Calculating Inflation rates
In a country where inflation is a concern, prices have risen by 40% over a 5-year period.
a) By what percent do the prices rise each year?
b) How long does it take for prices to rise by 5%?
So how would I start out this problem? When it says inflation that means the prices are going up.
Should I use this formula:
P0e^k*t = P0
e^k*5 = 1.4 to solve and find the answer to a?
If so then should the answer to a) be 0.067294447 or 6.7294447%?
Also for b) should the set up be like this?
1(1.067294447)^t = 1.05? Solve for t
If so should the answer to b) be 0.749155419?
Please help me with theses problems. Thank you.