Math Question
 04-30-2019, 01:23 PM #1 Full time employment: Posting here.   Join Date: Jun 2013 Posts: 852 Math Question Our governor wants to raise the gasoline tax \$.20 (\$.05 per year for the next 4 years) The tax is currently 28.6 CPG, if this happens, 4 years later, it would be at 48.6 CPG ‘If’ my math is correct, that's a hike of 69.93% But when I add the percentages one year at a time, I end up with the following ? Year 1: 28.6 to 33.6 = 17.48% Year 2: 33.6 to 38.6 = 14.88% Year 3: 38.6 to 43.6 = 12.95% Year 4: 43.6 to 48.6 = 11.47% 56.78% __________________ __________________ "No beast so fierce but knows some touch of pity, but I know none, therefore am no beast"
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 04-30-2019, 01:30 PM #2 Moderator   Join Date: Nov 2014 Posts: 2,675 Both numbers are correct. The only problem is not in your math. You’re taking the total increase over the current rate to get the 69.93%. The base assumption you are making is that the twenty cents goes into effect all at one time. But, it doesn’t. So your table shows the effective increase given that the increase is phased in over 4 years. Which is less than had it been instituted all at one time. __________________ __________________ Every day when I open my eyes now it feels like a Saturday - David Gray
 04-30-2019, 01:38 PM #3 Full time employment: Posting here.   Join Date: Sep 2013 Posts: 752 The problem is that successive percentages don't add they multiply: (1 + 0.1748) x (1 + 0.1488) x (1 + 0.1295) x (1 + 0.1147) = 1.70 28.6 x 1.70 = 48.6 So both your individual percentage increases and the total over 4 years result in an overall 70% increase. Fun Fact: This is also the reason why compound interest yields APRs greater than the sum of daily interest over 365 days.
 04-30-2019, 05:32 PM #4 Full time employment: Posting here.   Join Date: Jun 2013 Posts: 852 Thanks for the explanations! __________________ "No beast so fierce but knows some touch of pity, but I know none, therefore am no beast"
04-30-2019, 05:49 PM   #5
Thinks s/he gets paid by the post

Join Date: Jan 2007
Location: Minneapolis
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Quote:
 Originally Posted by ownyourfuture Thanks for the explanations!

It probably won't happen anyway..... So enjoy the Potholes until another Bridge Falls down.... Then they'll 'Spring into Action'!

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