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exponential growth

Hi guys, I'm revising exponential growth and have come across a question(in the attachment) which i don't really understand where to start. My question is that when the question says the investment increase by 8% per year, does that mean that on the second year the investment has been increased by 1.08% ?
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Original post by Alen.m
Hi guys, I'm revising exponential growth and have come across a question(in the attachment) which i don't really understand where to start. My question is that when the question says the investment increase by 8% per year, does that mean that on the second year the investment has been increased by 1.08% ?


I'm not sure what you mean by 1.08% - after the first year, the price will be 500 * 1.08. After the next year, it increases by 1.08 so it is 500*1.08*(....) and so on.
Reply 2
Avatar for atomc19
atomc19
11
The answer is 15.

log [base 1.08] (1500/500) = 14.(...)
round up to 15 so that it's over 1500
and you get 15
(edited 7 years ago)
Reply 3
Avatar for Alen.m
Alen.m
OP
11
Original post by SeanFM
I'm not sure what you mean by 1.08% - after the first year, the price will be 500 * 1.08. After the next year, it increases by 1.08 so it is 500*1.08*(....) and so on.


how did you realise that's 1.08%?this is the part I'm struggling at
Reply 4
Avatar for Zacken
Zacken
22
Original post by Alen.m
how did you realise that's 1.08%?this is the part I'm struggling at


The original amount is 100%, you add on 8% that's 108%.

108% is 108/100 = 1.08.
Original post by Alen.m
how did you realise that's 1.08%?this is the part I'm struggling at


1.08% isn't quite the right way to express it. - 108% is what you've got after 500.

It'll be clear if you do it this way:

For the first year, the value increases by 8% so you get 8% of 500 more on top, which is (8/100) * 500 = 0.08 * 500.

So the total that you have after the first year is 500 + 0.08*500 = 500(1+0.08) = 500(1.08)

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