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30 October, 17:13

An investment of $200 increases at a rate of 9.5% per year. What is the growth factor, b? I think it's 1.095 due to the keyword "increases" but I just want to make sure.

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  1. 30 October, 17:56
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    The future worth (F) of the current investment (P) given the interest (i) is calculated through the equation,

    F = P x (1 + i) ^n

    where n is the number of years or compounding period. The growth factor in the equation is, 1 + i which is equal to 1 + 0.095 or 1.095.
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