A machine cost $3,200 on January 1, 2000, and $5,200 on January 1, 2004. The average inflation

Question:

A machine cost $3,200 on January 1, 2000, and $5,200 on January 1, 2004. The average inflation rate over these four years was 8% per year. What is the true percentage increase in the cost of the machine from 2000 to 2004?
(a) 26.45%
(b) 54.12%
(c) 7.00%
(d) 17.58%
(e) 35.11%