Question

What is the rate of the growth of the equation below

254,000(1.125)^t

Answer 1

Answer: 12.5%

Step-by-step explanation:

Rewrite the 1.125 as 1+0.125

So we have the equation y = 254000(1+0.125)^t

Compare that to y = a(1+r)^t and you'll find that r = 0.125

In other words, solving 1+r = 1.125 leads to r = 0.125

That corresponds to a 12.5% growth rate. If r was negative, then you'd have exponential decay.