Question

The U.S. government fixed the price of gold at $35 an oz in 1934. In 2005, the price of the yellow metal was $480 an oz. Calculate the price appreciation of gold as percent per year, compounded annually.

Answer 1

For Calculating Price Appreciation per year , we can use simple compound Interest formula ie

	=	final amount
	=	initial price of gold in 1934
	=	Appreciation /influation rate per year
	=	number of times Influation applied per time period
	=	number of time periods elapsed

Here A = $ 480, P = S35, n = 1, r= to be find

and t = 71 years ie diffrence of 2005 and 1934

now put all value in formula

$ 480= $35(1+r)^71

$13.71428 = (1+r) ^71

by solving r = .037567

therefore answer is price appriciation 3.756% per year