Assume the average vehicle selling price in the United States last year was $36,420. The average price five years earlier was $31,208. What was the annual increase in the selling price over this time period

3.14%

Explanation:

FV = PV (1+r/100) ^n

FV = $36,420, PV = $31,208, r=? n = 5

36420 = 31208 * (1+r/100) ^5

We divide both side by "31,208^5" to make r in (1+r/100) subject of formula

(36420/31208) ^ (1/5) = (1+r/100)

(1+r/100) = (36420/31208) ^ (1/5)

(1+r/100) = 1.0314

r=1.0314-1

r=0.0314

r=3.14%

The conclusion is that 3.14% is the annual increase in the selling price over this period of 5 years