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To calculate the average annual rate of inflation for the bus fare from Lae to Madang over 3 years, we will use the formula for the compound annual growth rate (CAGR).
The CAGR formula is:
CAGR = (Ending Value / Beginning Value) ^ (1 / Number of Years) - 1
Given:
Beginning Value (3 years ago) = K60
Ending Value (now) = K80
Number of Years = 3
CAGR = (K80 / K60) ^ (1 / 3) - 1
CAGR = (1.3333)^(1/3) - 1
CAGR = 1.116 - 1
CAGR = 0.116
Therefore, the average annual rate of inflation for the cost of fares from Lae to Madang over 3 years is approximately 11.6%.