203,985 views
33 votes
33 votes
9. V = 300(1.02)* models exponential

growth, where t represents the number
of years.
a) What is the annual rate of growth?

b) Calculate the monthly rate of growth
to the nearest hundredth of a percent.

User Meisam
by
2.8k points

1 Answer

14 votes
14 votes

Answer:

a) 2%

b) 0.17%

Explanation:

Exponential growth is modeled by the equation ...

y = a·b^x

where 'a' is the initial value, and 'b' is the growth factor.

When x is has units of time, the growth factor 'b' applies over 1 unit of x. The applicable growth factor for different units of time can be found using the rules of exponents applied to the equation written with x expressed in the different units.

The growth rate is related to the growth factor by ...

b = 1 +r . . . . where r is the growth rate

r = b -1 . . . . solved for r

__

a)

Your equation is ...

V = 300(1.02^t)

where t is expressed in years. Then the corresponding annual growth rate is ...

b = 1.02

r = b -1

r = 1.02 -1 = 0.02 = 2% . . . annual rate of growth

__

b)

When the equation is written so that t is expressed in months, it becomes ...

V = 300(1.02)^(t/12)

V = 300(1.02^(1/12))^t

Now, the growth factor (per month) is

b = 1.02^(1/12)

and the monthly growth rate is ...

r = 1.02^(1/12) -1 ≈ 1.00165158 -1 = 0.00165158

r ≈ 0.17% . . . . monthly rate of growth

User Yedetta
by
2.5k points