Wirte an exponential growth model.
22. A business had a $20,000 profit in 1990. Then the profit increased by 20% per year for the next 10 years.
y=c(1+r)^t
y=20,000(1+0.2)^10
Is that correct?
Yes, your equation is correct. It represents an exponential growth model, where:
- "y" represents the profit at a given time,
- "c" represents the initial profit (in the year 1990), which is $20,000 in this case,
- "r" represents the growth rate per period, which is 20% or 0.2 in decimal form,
- "t" represents the number of periods, which is 10 years in this case.
Substituting these values into the equation, we have:
y = 20,000(1 + 0.2)^10.
This equation will give you the profit for the business in the year 2000, after it has grown at a rate of 20% per year for 10 years.