In the exponential growth formula y = a(1 + r)^t, what does r stand for?

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Study for the Algebra 1 Honors End-of-Course Test. Study with flashcards and multiple-choice questions, each question has hints and explanations. Get ready for your exam!

Multiple Choice

In the exponential growth formula y = a(1 + r)^t, what does r stand for?

Explanation:
The main idea here is identifying what the r in the exponential growth formula represents. In y = a(1 + r)^t, r is the rate of growth per time period, written as a decimal. This means each time unit, you multiply by (1 + r). So if r = 0.05, you’re growing by 5% each period, and you multiply by 1.05 every period. The initial amount is a, the time is t, and the final amount after t periods is y.

The main idea here is identifying what the r in the exponential growth formula represents. In y = a(1 + r)^t, r is the rate of growth per time period, written as a decimal. This means each time unit, you multiply by (1 + r). So if r = 0.05, you’re growing by 5% each period, and you multiply by 1.05 every period. The initial amount is a, the time is t, and the final amount after t periods is y.

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