Question

What is the growth factor of the following example? Assume time is measured in the units given. Water usage is increasing by 3% per year.

a. 3 per year c. 1.03 per year b. 0.03 per year d. 103 per year


Answer: C

Answer 1

c. 1.03 per year

Explanation:

We use the formula:
`Present (1+growth rate)^(time)`

Water usage is increasing by 3% per year.

So, growth rate is 3% or 0.03

So, the growth factor in 't' years will be :

present value x (1.03)^t

Means per year the growth factor will increase by 1.03.

Answer 2

c. 1.03 per year

Explanation:

Growth factor is the factor by which a quantity multiplies itself over time. If the growth rate is 3% per year, the usage is being multiplied by 1.03 each year.