Saturday, May 11, 2013

Math is hard - part 2020

This is from a piece about some new cable unbundling legislation (not a bad thing in and of itself). What I am offended by is this statement

If McCain's legislation gets enacted, it could save users a nice chunk of change by arresting the alarming increases in monthly cable bills. Right now, customers pay an average of $86 a month, but if cable companies continue to raise prices at a rate of 6 percent a year, the cost could skyrocket to beyond $200 a month by 2020, according to the consumer market researcher NPD Group.

Now, most folks will not click through the link to the Huffington Post much less go the the source  , they will just take the number at face value. Basic math says that it cannot be correct.

Let's assume that the average rate in 2012 was $86.00.

6% added to that gives us $91.16 at the end of 2013
6% added to that gives us $96.63 at the end of 2014
6% added to that gives us $102.43 at the end of 2015
6% added to that gives us $108.57 at the end of 2016
6% added to that gives us $115.09 at the end of 2017
6% added to that gives us $121.99 at the end of 2018
6% added to that gives us $129.31 at the end of 2019
6% added to that gives us $137.07 at the end of 2020

it takes until 2027 for it to pass $200.

What am I missing except for the fact that innumeracy is rampant in this country?

Note that I am not saying that the number from the market research firm is incorrect. It is just that it cannot be based on the information that they shared with the world.



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