anonymous
  • anonymous
what is the relationship between compound interest and exponential growth? in your own words please so i understand ? :))
Mathematics
  • Stacey Warren - Expert brainly.com
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jamiebookeater
  • jamiebookeater
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jonathanvaldes98
  • jonathanvaldes98
Compound growth, exponential growth are words used to describe ways in which the value of an investment will grow
jonathanvaldes98
  • jonathanvaldes98
dous that explain it enough
zepdrix
  • zepdrix
This is probably more in regards to the question you asked last night, but maybe it will help. Let's say you have \(\Large $20\). And let's say you invest it at a rate of 25%. With simple interest, the interest that you're gaining is always calculated off of the base amount. So the next time the interest is calculated, you will have \(\Large $25\). The time after that will be \(\Large $30\). See how it keeps increasing by 25% of the base amount? (25% of 20 is 5). With compound interest we don't calculate interest based off of the base, but off of the new total. So using our last example: We start with \(\Large $20\) and after our first pay period we gain some interest putting us at \(\Large $25\). Our next pay period after that, the interest generated will be 25% of our new amount, \(\Large $25\). 25% of $25 is \(\Large $31.25\).

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zepdrix
  • zepdrix
So we need to relate this to exponential growth? Hmm
anonymous
  • anonymous
that expains it better! thank you everyone!

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