Exponential Growth and Decay

Overview

Goal. Convert a percent rate into a growth or decay factor, build the exponential model, and evaluate it over one or more periods.

Growth factor (definition). The multiplier for one period: 1 + r for growth and 1 − r for decay, where r is the rate as a decimal.

Percent rate to factor: growth (1 + r), decay (1 − r), and compound growth.

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Goal. Turn a percent rate into a growth or decay factor, build the function, and read a given factor back as a percent change.

Growth factor (definition). The multiplier for one period: 1 + r for growth and 1 − r for decay, where r is the rate as a decimal.