Compute the average annual rate of inflation that prevailed between 1980 and 2018. The CPI in 1980 is 32.81, and the CPI in 2018 is 100; . Please begin with a general formula to compute the average annual rate. If not, one point will be deducted.

I was thinking about use CPI2018-CP1980/1980=205%, and divides by 38 years, which is 5.39%.

And another friends said it is supposed to be:

CPI₁₉₈₀ ( 1 + r )ⁿ = CPI₂₀₁₈

32.81 ( 1+ r )³⁸ = 100

(1 + r)³⁸ = 100 32.81

( 1 + r)³⁸ = 3.04785126

Now we taking root 38.

1 + r = 1.02976

r = 1.02976 - 1

r = 0.02976 or 2.976%

Would you please inform me which one is correct, and what the general formula means? THX!