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Question 11
Suppose a long term investment is modeled by the exponential function where
is the total value after year. What does 25 represent in the equation?
the growth factor
the number of years
the interest rate
thitial deposit

Ask by Martin Carter. in the United States
Jan 23,2025

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25 represents the growth factor in the equation.

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Beyond the Answer

In the equation , the number 25 represents the growth factor in your investment model. It indicates that for every cycle of time defined (in this case, it appears to be per year), the value of the investment increases by a factor of 25. Essentially, this number encapsulates how much the investment grows over that defined period.
To visualize this a bit more, consider this: if you’re planting seeds in your garden, the growth factor would reflect how much those seeds multiply over time. With a growth factor of 25, you’re not just planting, you’re cultivating a flourishing garden of financial returns! This kind of exponential growth demonstrates the power of compounding in investments—making your money work for you as time goes on.

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