can you answer this word problem? With work?

Question

the cash flow per share for timberland company was $0.18 in 1995 and $3.65 in 2000. what was the average rate of change in the cash flow from 1995 to 2000

a) $1.441 per year

b)$0.694 per year 

c.)-0.694 per year 

d.)-1.441 per year

 

Answer 1

Hello Azza,

 

Whenever a problem asks you to calculate an average rate of change, remember this general formula:

 

     r_avg = (v_final - v_initial) / t       The general formula for average rate of change

 

     r_avg is the average rate of change

     v_final is the final value of the thing that's changing

     v_initial is the initial value of the thing that's changing

     t is the time that has passed between the initial state and the final state

 

This general formula will work with any average rate of change, whether you're finding:

• an average speed (ex: a car passes from the 12-mile marker to the 20-mile marker in 10 minutes)
• an average drain rate (ex: a water cooler changes from holding 3 gallons of water to 1.2 gallons of water in 3 minutes)
• an average rise in fuel costs (ex: a gas station goes from charging $1.99 per gallon of gas in January 2010 to $3.99 per gallon in December 2016)

 

Anyway, you have all of the information you need to find your average change in cash flow:

 

     r_avg is what you're looking for

     v_final is $3.65

     v_initial is $0.18

     t is the number of years between 1995 and 2000, or 5 years

 

If you plug in all of those numbers into the equation, you get:

 

     r_avg = ($3.65 - $0.18) / 5yr

 

Take it from there, Azza!  :)