Question

f(t)=Q0(1+r)^t. Find the growth rate, r, to the nearest thousandth, given f(0.01)=1.06 and f(0.11)=1.09.

Answer 1

To find the ratio, you just need to divide the two function and solve it. The calculation would be:

F(t)=Q0(1+r)^t

F(0.11)/F(0.01) = 1.09/1.06
Q0(1+r)^0.11 / Q0(1+r)^0.01 = 1.0291
(1+r)^(0.11-0.01) = 1.0291
(1+r)^0.10 = 1.0291
(1+r)^0.10*10 = 1.0283 ^10
(1+r )= 1.3325
r = 0.323