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Topic 1013

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TOPIC 1013
Description
The Pell Grant program of the federal government provides financial aid to needy college students. If
the average grant is slated to increase from $4050 to $5400 over the next 5 years “to keep up with
inflation,” what is the average inflation rate per year expected to be?
SOLUTION.
In order to calculate the expected average inflation rate per year, we can first calculate the the
percentage increase in price using the average grant expected change given and then we divide the
price percentage by the number of given year. That is;
Price increase percentage = [($5400 - $4050)/$4050] x 100
= [1,350/4,050] x 100
= 0.33333 x 100
Price increase percentage = 33.33 (rounded to 2 dp)
Now, the expected average inflation rate per year = Price increase percentage/5 years
Average inflation rate per year = 33.33%/5 yrs.
= 6.666%

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TOPIC 1013 Description The Pell Grant program of the federal government provides financial aid to needy college students. If the average grant is slated to increase from $4050 to $5400 over the next 5 years “to keep up with inflation,” what is the average inflation rate per year expected to be? ...
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