We are learning about linear and exponential growth and simple and compound interest. How do I know if I use .02 if my growth rate is 2% or if I use 1.02? What is the difference if I have the 1 in front? I'm a little confused about that. Thank you.

Question

We are learning about linear and exponential growth and simple and compound interest.  How do I know if I use .02 if my growth rate is 2% or if I use 1.02?  What is the difference if I have the 1 in front?  I'm a little confused about that.  Thank you.

Steve · Answer

2% growth means that x grows to x + .02x = x*1.02 The .02x is the amount of growth (addition) 1.02 is the growth factor (multiplication)