Over a 7-year period, the number of uninsured motorists in New Mexico dropped from 33% to 10% because an up-to-date computer database allowed the state to better police its requirements for car and truck liability insurance. Assuming the decrease occurred uniformly and compounded annually, what was the annual rate of the decrease?

What will be an ideal response?


There are no tables for negative interest rates. Write the equation for i < 0% values

F = P(1 – i) n
10 = 33(1 – i) 7
0.303030 = (1 – i) 7
0.303030 1/7 = (1 – i)
i = -15.7% per year

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