This question is looking at exponential growth. Some hints as to how we know this is an exponential growth question include the following:

A mention of a percent increase or decrease every period

“Compounded” every certain amount of time

Variable (

*x, y*,*z*, t, etc.) in the exponent

But the big giveaway is that the format of the given expression neatly matches the exponential growth formula.

Where

*A*represents your starting value,*r*represents your growth per period*t*represents the number of periods

Compare this to the following equation:

You can see that 1+*r* in the compound growth formula and *x* in the expression provided are in the same relative positions.

So they are equivalent.

We are also told the interest (or growth rate) is 2%. So we can substitute the 2% for *r*.

-Nokware Knight

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