Question

A can of soda in 1972 costs $0.10, by 2012 it cost $1.25.

Find the rate at which the cost of a can of soda increases over this time period.

Answer 1

if the rate of increase is linear, then
rate = (1.25 - .10)/(2012-1972)
= 1.15/40 = .02875
or appr 3 cents a year

Answer 2

on the other hand, given the topic of the posting,

0.10(1+r)^40 = 1.25
(1+r)^40 = 12.5
1+r = 1.065
r = 6.5% per year