Question

Describe the relationship between compound interest and exponential growth

Answer 1

Answer:

Relationship between compound interest and exponential growth

C.I = $P[(1 + \frac{R}{100})^{n} - 1]$

where, P =Principal

R =Rate of interest, n= Duration i.e time interval for which money has been taken, C.I =Compound Interest

Exponential growth = A $(1+\frac{K}{100})^s$

Where , A=Initial value of population, K= Rate at which population is declining in percentage, s=total time between starting population and final population

Now , If you compare between Exponential growth and compound interest

P→(Replaced by)→A,

R→(Replaced by)→K,

n→(Replaced by)→s,

As C.I is calculated for money, and Exponential word is used for both money as well as increase in population.

So, just replacing keeping the meaning same

C.I = $P[(1 + \frac{R}{100})^{n}]$  - P

→Compound Interest = Exponential growth - Initial Value(either money or any population considered)