Question

In​ 1885, first-class postage for a​ one-ounce letter cost​ $0.02. The same postage in 2015 costs​ $0.49. What compounded annual increase in the cost of​ first-class postage has been experienced over this period of​ time?

Answer 1

Answer:

2.49%

Explanation:

The period 't' between 2015 and 1885 is:

$t = 2015 -1885 = 130\ years$

The annual rate 'r' at which the original $0.02 value has been compounded over 130 years to reach a value of $0.49 is determined by:

$0.49 = 0.02*(1+r)^{130}\\r=\sqrt[130]{24.5}-1\\ r=0.0249 = 2.49\%$

The cost of​ first-class postage has experienced an annual increase of 2.49% over this period.