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Growth by a fixed percentage

An exponential model has a starting value and a growth factor. The growth factor 1.03 means a 3% increase per period. After n periods the starting value has been multiplied by the growth factor n times. The model fits interest, inflation and population growth when the percentage is the same every time. You insert the number of periods at the end, and round as the task asks.

Try it yourself

Exponential growth

f(n) = a \cdot b^n

after n periods

b = 1 + \frac{p}{100}

growth factor

Symbols

$a$	starting value	NOK
$p$	percent per period	%
$n$	number of periods

Example

8,000 NOK at 3% interest for 10 years: $8\,000 \cdot 1.03^{10} \approx 10\,751.3$ NOK.

The exponent is the number of periods, not the percentage.

Practise exponential models for free →

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Part of Mathematics S1: Exponential models.