Question

For the annual rate of change of +70%, find the corresponding growth or Decay Factor.

Answer 1

Hello there!
1. Okay. So 70% is positive, so it is a corresponding growth. 70% is 0.7 in decimal form. C and D are both eliminated, because that's too large. When something grows by 70%, that is less than double. 0.7 is not right either, because that's more of a decay than a growth. The only answer that makes sense id 1.70, because you are going up, and adding 1 to decimal form brings you to the decimal that when multiplied will bring you to the total. The answer is B: 1.70.

2. So, -75% is negative, so it is a decay factor. A is eliminated, because it makes no sense and B is out, because that represents growth, not decay. You lose 75% of the amount overtime compounded, but you still have 25% that remains. To find that amount, you would subtract that amount from 1 to get the decay. 1 - 0.75 is 0.25. The decay factor is 0.25. The answer is D: 0.25.