An energy market analyst predicts that over the next 6 years, the price of electricity will increase by an annual rate of 2.5%, followed by a 6-year period with an annual increase rate of 3.5%. This is equivalent to what average annual price increase over the entire 12-year period?
Added by Douglas H.
Step 1
5%. Let the initial price of electricity be \( P \). After 6 years, the price can be calculated using the formula for compound interest: \[ P_{6} = P \times (1 + 0.025)^6 \] Calculating this: \[ P_{6} = P \times (1.025)^6 \] Using a calculator, \( Show more…
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