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5 July, 01:44

A year's tuition at a state university cost $250 in 1972 when the CPI equaled 0.418. The cost of a year's tuition at the same state university cost $8,000 in 2016 when the CPI equaled 2.40. The real cost of tuition between 1972 and 2016:

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  1. 5 July, 01:50
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    Tuiton real cost incrased by 640%

    Explanation:

    We divide the nominal cost of each year by the CPI index to get the real cost on each year (adjusted by inflation)

    250 / 0.48 = 520,8333

    8,000 / 2.40 = 3.333,33

    The real price of tuiton increase from 520.83 to 3,333.33 which stnad for a percentage increase of:

    3,333.33 / 520.83 = 6,4 = 640%
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