Geometric Growth

and Decay
• Example 1: You invest $6000 in the bank. You
are paid an interest rate of 8% per annum. The
interest is added to your investment each year.
How much do you have after 1 year? 2 years?
3 years? n years?
• When dealing with compound interest, if P
dollars are invested for n years at a rate of r, the
amount after n years is:
 It’s not “n-1” because the first term is the
original investment. The amount at the end
of the first year is the second term.

• When dealing with compound interest, if P

dollars are invested for n years at a rate of r, the
amount after n years is:
The “1 +” represents the original amount. If it
was rn we would only be calculating the
interest ... not the total amount in the account

• When dealing with compound interest, if P

dollars are invested for n years at a rate of r, the
amount after n years is:
• If the interest is paid more that once per year:
• r is the annual rate divided by the times per
year

• n is the number of total payments

• Interest=FV-PV
• Example 2: Hiba invests $10,000 for 5 years in
an account that pays 6% per year paid monthly.
How much does she have after 5 years?
• Growth: An = A o (1+ r )
n

•Decay: An = A o (1− r )
n


• Growth: An = A o (1+ r )
n

•Decay: An = A o (1− r )
n

An = amount after n periods

Ao = original amount
 An = A o (1+ r )
Again, do not
• Growth: n
subtract 1 from n
because the
second term is the
amount at the end
•Decay: An = A o (1− r )
n
of the first time
period

An = amount after n periods

Ao = original amount
• Example 3: A nest of ants consists of 5000
before being sprayed with insecticide. After
spraying the populations decreases by 12%
each week.

a) How many ants will there be after 10 weeks?

20 weeks?

b) When will there be 1000 ants?

• Homework:
•5F.1 3,5,6
•5G 2, 3